Hamilton: Finance, Loans



Alexander Hamilton was a Founding Father, soldier, economist, political philosopher, one of America’s first constitutional lawyers and the first United States Secretary of the Treasury.

Alexander Hamilton was a Founding Father, soldier, economist, political philosopher, one of America’s first constitutional lawyers and the first United States Secretary of the Treasury.

Alexander Hamilton: The Works of Alexander Hamilton, Volume 3


Finance: Loans


Treasury Department,

loans

In the House of Representatives of the United States,

Wednesday, January 23, 1793.

Resolved, That the President of the United States be requested to cause to be laid before this House copies of the authorities under which loans have been negotiated, pursuant to the acts of the 4th and 12th of August, 1790, together with copies of the authorities directing the application of the moneys borrowed.

Resolved, That the President of the United States be requested to cause this House to be furnished with the names of the persons by whom and to whom the respective payments of the French debt have been made in France, pursuant to the act for that purpose, specifying the dates of the respective drafts upon the commissioners in Holland, and the dates of the respective payments of the debt. A similar statement is requested respecting the debts to Spain and Holland.

Resolved, That the Secretary of the Treasury be directed to lay before this House an account exhibiting half monthly the balances between the United States and the Bank of the United States, including the several branch banks, from the commencement of those institutions to the end of the year 1792.

Resolved, That the Secretary of the Treasury be directed to lay before this House an account of all moneys which may have come into the sinking fund, from the commencement of that institution to the present time, specifying the particular fund from which they have accrued, and exhibiting, half yearly, the sums uninvested, and where deposited.

Resolved, That the Secretary of the Treasury be directed to report to this House the balance of all unapplied revenues at the end of the year 1792, specifying whether in money or bonds, and noting where the money is deposited: That he also make report of all unapplied moneys which may have been obtained by the several loans authorized by law, and where such moneys are now deposited.1
report of the secretary of the treasury in pursuance of the foregoing resolutions

Treasury Department,

February 4, 1793.
Sir:

I have lost no time in preparing, as far as has been practicable, consistently with the course of facts, the several statements required by the resolutions of the House of Representatives of the 23d of last month; and I have concluded to add to them such further statements as appeared to me necessary to convey fully the information which is understood to be the object of those resolutions. It was my first intention to submit these statements collectively, with such explanatory remarks as the occasion might demand; but finding, on experiment, from the extent and variety of the matter involved in the resolutions, that more time will be requisite for a full development of it than I had anticipated, considerations of weight in my mind have determined me to present the different parts of the subject successively. Among other advantages, incident to this course of proceeding, will be that of having it in my power to give a more accurate and mature view of the entire subject, without too great a dereliction of the current business of the Department. In executing the task I propose to myself, I shall rely on the indulgence of the House to a latitude of observation corresponding with the peculiar circumstances of the case.

The resolutions to which I am to answer were not moved without a pretty copious display of the reasons on which they were founded. These reasons are before the public, through the channel of the press. They are of a nature to excite attention; to beget alarm; to inspire doubts. Deductions of a very extraordinary complexion may, without forcing the sense, be drawn from them.

I feel it incumbent upon me to meet the suggestions which have been thrown out, with decision and explicitness. And while I hope I shall let fall nothing inconsistent with that cordial and unqualified respect which I feel for the House of Representatives; while I acquiesce in the sufficiency of the motives that induced on their part the giving a prompt and free course to the investigation proposed, I cannot but resolve to treat the subject with a freedom which is due to truth, and to the consciousness of a pure zeal for the public interest.

I begin with the last of the four resolutions, because it is that which seeks information relating to the most delicate and important of the suggestions that have been hazarded.

Here, however, I have to regret the utter impossibility of a strict compliance with the terms of the resolution. The practicability of such a compliance would suppose nothing less than that, since the last day of December, 1792, all the accounts of all the collectors of the customs and other officers of the revenue throughout the whole extent of the United States could be digested, made up, and forwarded to the Treasury; could be examined there, settled, and carried into the public books, under their proper heads; in a word, that all the accounts of the revenues, receipts, and expenditures of this extensive country would have passed through a complete exhibition, examination, and adjustment within the short period of twenty-three days.

It was made (as I presume from the result) satisfactorily to appear to a committee of the House of Representatives, who were charged during the last session with framing a direction to the Treasury for bringing forward an annual account of receipts and expenditures, that the course of public business would not admit of the rendering of such an account in less than nine months after the expiration of each year; in conformity to which idea their report was formed and an order of the House established.

I need do nothing more to evince the impracticability of an exact compliance with the resolution in question, than to observe that it is even more comprehensive (though with less detail) than the order of the House to which I have alluded.

To evince, nevertheless, my readiness to do all in my power toward fulfilling the views of the House and throwing light upon the transactions of the Department, I shall now offer to their inspection sundry statements,1 marked A, AB, B, C, D, E, F, which contain, as far as is at this time possible, the information desired, and with sufficient certainty and accuracy to afford satisfaction on the points of inquiry involved in the resolution.

The statement A shows in abstract the whole of the receipts into, and expenditures from, the Treasury, commencing with the first of January, and ending with the last of December, 1792, corresponding with the accounts of the Treasurer. These accounts have been regularly settled up to the end of September, and copies have been laid before the two Houses of Congress. The account for the quarter terminating with the year has not yet passed through the forms of settlement, but is under examination, and will, no doubt, be settled as it stands; the manner of conducting the business, and the usual care and accuracy of the officer concerned, leaving very little room to apprehend misstatement or error. A copy of this account is herewith submitted, in the schedule marked C.

This statement takes up the balance of the general account of receipts and expenditures to the end of the year 1791, as reported to the House of Representatives within the first week of the present session, and continuing it down to the end of 1792, shows a balance then in the Treasury of seven hundred and eighty-three thousand four hundred and forty-four dollars and fifty-one cents.

The statement B is a more comprehensive document. It is a general account of income and expenditure. It shows not merely the actual receipts of money into the Treasury, but the whole amount of the national revenues, from the commencement of the present Government, to the conclusion of the year 1792, as well outstanding as collected; the proceeds of domestic loans; the whole amount of the sums which have been drawn into the United States, on account of the foreign loans; and all other moneys, from whatever source, which have accrued within the period embraced by the statement.

These items form the debit side of the account, amounting to seventeen millions eight hundred and seventy-nine thousand eight hundred and twenty-five dollars and thirty-three cents.

The credit side consists of two items: 1. The whole amount of the actual expenditures to the end of the year 1791, as stated in the general account of receipts and expenditures before referred to. 2. The whole amount of the actual expenditures during the year 1792, as specified generally in the statement A, and particularly in the several quarterly accounts of the Treasurer, amounting to twelve millions seven hundred and sixty-five thousand one hundred and twenty-eight dollars and eighty-three cents.

The balance of this account of income and expenditure is consequently five millions one hundred and fourteen thousand six hundred and ninety-six dollars and fifty cents; which corresponds with the excess of the public income (including the proceeds of loans, foreign and domestic) beyond the actual expenditure, or, more properly speaking, disbursement, to the end of the year 1792. This of course is exclusive of those parts of the proceeds of foreign loans which have been left in Europe, to be applied there; the amount, application, and balance of which are exhibited, as far as they are yet known at the Treasury, in the statement No. 1, of my late report on foreign loans.

This balance, as noted in the statement B, is composed of the following particulars:
1. Cash in the Treasury, per statement A. $783,444 51
2. Cash in the Bank of the United States, and the offices of discount and deposit of New York and Baltimore,
not yet passed to the account of the Treasurer, per statement AB . . 605,883 08
3. Proceeds of Amsterdam bills remaining in deposit in the Bank of North America, including the sum of one hundred and fifty-six thousand five hundred and ninety-five dollars and fifty-six cents, advanced by the bank, without interest, which is credited in the general account of receipts and expenditures, statement A . . 177,998 80
4. Proceeds of Amsterdam bills sold, but not yet received . . . . 614,593 02
5. Cash in hands of collectors of customs, per abstract D . . . . 151,851 25
6. Bonds unpaid at the end of the year one thousand seven hundred and ninety-two, on account of the duties on imports and tonnage, and falling due between that time and May, one thousand seven hundred and ninety-four, per abstract E . . . 2,442,069 15
7. Uncollected residue of duties on spirits distilled within the United States, per abstract F . . . . . . 341,057 19
Making, together . . $5,116,897 00

This aggregate somewhat exceeds the balance of the account, but in a case where estimates must necessarily supply the deficiency of ascertained results, differences of this nature are of course. It is at the same time satisfactory to observe that the estimates which have been heretofore communicated are proved, by the official documents already received, to have been essentially correct.

It will no doubt readily occur to the House, that a very small part of the excess which has been stated is a real surplus of income. There remain to be satisfied numerous objects of expenditure, charged upon the fund by the appropriations which have been made, that cannot fail ultimately to exhaust it, probably within four or five hundred thousand dollars, which will be embraced in the appropriations for the service of the year one thousand seven hundred and ninety-three. A further explanation on this point is reserved for future communication.

A due comprehension of the statements now presented must obviate every idea of a balance unaccounted for, in whatever sense the allegation may have been intended to be made.

If there was before any obscurity on the subject, it was certainly not the fault of this Department. Till the last resolutions, no call has been made upon it which rendered it proper to exhibit a general view of the public moneys and funds, or to show the amount and situation of such as were unapplied. Particular calls for particular objects were made, which, as I conceive, were complied with; but they were not comprehensive enough to embrace a disclosure of that nature.

It could not therefore with propriety have been alleged that there was a balance unaccounted for; to infer it from documents which contained only a part of the necessary information was not justifiable. Nor could it otherwise happen, than that conclusions wholly erroneous would be the consequences of taking such imperfect data for guides.

It may be of use, by way of elucidation, to point out some of the most palpable features of the error which has been entertained.

The following items are stated as the basis of the supposed deficiency:
Residue of the proceeds of the foreign bills supposed to be unapplied (after deducting the sums furnished for St. Domingo, and the amount of the debt to the foreign officers) . . . . . $1,668,190
Surplus of sinking fund, meaning, I presume, that part of the surplus of the revenue to the end of the year 1790, which had not been applied in purchases . . . 400,000
Surplus of revenue of the year 1792, as reported . . . . . . . 277,385
$2,345,575
Deduct, in bank, meaning, I presume, the balance of the Treasurer’s cash account . 790,642
Balance, not accounted for . $1,554,933

It appears, in the first place, to have been overlooked that, in statement No. 3 of my late report concerning foreign loans, mention is made that on the 3d of January there remained to be received of the proceeds of the foreign bills six hundred and thirty-two thousand one hundred and thirty-two dollars and two cents; consequently, that sum could not be considered as in the Treasury, and ought to be deducted from the supposed deficiency.

Among the official papers, which it is intimated were consulted, was an original account, rendered by the Bank of the United States, of the sales of Amsterdam bills, showing a sum of six hundred and five thousand eight hundred and eighty-three dollars and eight cents, as having been received by the bank and two of its offices of discount and deposit, for the proceeds of those bills. Had the document been understood, it would have been known that this sum was in bank over and above the balance of the Treasurer’s cash account; and this also would have served to account for a large part of the supposed deficiency—namely, six hundred and five thousand eight hundred and eighty-three dollars and eight cents. The course of this transaction will be hereafter explained.

But, among the misconceptions which have obtained, what relates to the surplus of revenue of the year 1792, is not the least striking. The laws inform (and consequently no information on that point from this Department could have been necessary) that credits are allowed upon the duties on imports, of four, six, nine, twelve months, and, in some cases, of two years. Reason dictates, that a surplus, in such case, must be considered as postponed in the collection or receipt, till all appropriations upon the fund have been first satisfied. The account of receipts and expenditures to the end of 1791, in possession of the House, shows that, at that time, no less a sum than one million eight hundred and twenty-eight thousand two hundred and eighty-nine dollars and twenty-eight cents of the antecedent duties were outstanding in bonds. How, then, could it have happened that the surplus of 1792 was sought for in the Treasury at the very instant of the expiration of the year? I forbear to attempt to trace the source of a mistake so extraordinary!

Let me, however, add, that, of the surplus in question, one hundred and seventy-two thousand five hundred and eighty-four dollars and eighty-two cents are not payable till April and May, 1794, as will be seen by the abstract E.

Thus I have not only furnished a just and affirmative view of the real situation of the public account, but have likewise shown, I trust in a conspicuous manner, fallacies enough in the statement, from which the inference of an unaccounted-for balance is drawn, to evince that it is one tissue of error. In this I might have gone still further, there being scarcely a step of the whole process which is not liable to the imputation of misapprehension. But I wish not unnecessarily to weary the patience of the House.

Another circumstance, to which importance has been given, and which was noticed in connection with the suggestion last discussed, is a disagreement between a memorandum in the Treasurer’s bank-book, and the statement reported by me of the amount of bills drawn at the Treasury upon the foreign fund. A disagreement no doubt exists, and to the extent of five millions seven hundred and sixty thousand one hundred and thirty-eight florins or guilders.

But the following circumstances contain the solution of this disquieting appearance.

There will be found in the statement A two several credits, each for two millions of dollars, as for moneys received into the Treasury, with corresponding debits of equal sums, as for moneys paid out of the Treasury.

But neither the one nor the other did in reality take place. The whole is a mere operation, to accomplish the purposes of the eleventh section of the “act to incorporate the subscribers to the Bank of the United States,” without an inconvenient and unnecessary displacement of funds.

That section authorizes a subscription to the stock of the bank, on account of the Government, not exceeding in amount two millions of dollars, and provides for the payment of it out of the moneys which should be borrowed by virtue of either of the acts of the 4th and 12th of August, 1790; the first making provision for the public debt, the last for reducing it; enjoining, at the same time, that a loan should be made of the bank to an equal amount, to replace the moneys which were to be applied to the payment of the subscription.

It is evident that nothing could have been more useless (at the same time that it would have been attended with obvious disadvantages to the Government), than actually to draw from Europe, out of the moneys borrowed there, the sum necessary for the payment of the subscription to the bank, and again to remit, out of the loan which was to be obtained of the bank, a sufficient sum to replace such moneys, or such part of them as may have been destined for the foreign object. Loss upon exchange, in consequence of overstocking the market with bills; loss in interest, by the delays incident to the operation; and which would necessarily have suspended the useful employment of the funds for a considerable time: these are some of the disadvantages to the Government. To the bank alone could any benefit have accrued; which would have been in proportion to the delay in restoring or applying the fund to its primitive destination. Such an operation, therefore, could only have been justified by an indisposition on the part of the bank to facilitate the principal object, without the intervention of actual payment.

But no such disposition existed. On this, as on every other occasion, a temper liberal toward the Government has characterized the conduct of the directors of that institution.

It was accordingly proposed by me, and agreed to by them, that the object to be accomplished should be carried into effect by a merely formal arrangement. In this, however, it was necessary to consult the injunctions of law, and the principles of the constitution of the Treasury Department.

These points then were to be effected: a payment of the subscription money, to vest the Government with the property of the stock; possession of the means of paying it, which were to be derived from the foreign fund, and of course were first to be in the Treasury before payment could be made; the replacing what should be taken from that fund by a loan of the bank.

The following plan for these purposes was devised and executed by previous concert:

The Treasurer drew bills upon our commissioners in Amsterdam for the sums requisite to complete the payment on account of the subscription. These bills were purchased by the bank, and warrants in favor of the Treasurer upon the bank served, to place the proceeds in the Treasury. Warrants afterward issued upon the Treasurer, in favor of the bank, for the amount of the subscription money, which was receipted for on the part of the bank as paid. Other warrants then issued in favor of the Treasurer upon the bank, for equal sums, as upon account of a loan to the Government, which warrants were satisfied by a re-delivery to the Treasurer of the bills that had been drawn upon the commissioners. In the last place, warrants were drawn upon the Treasurer to replace the moneys supposed by the arrangement to be drawn from the foreign fund, which perfected the operation. But, from the detail which has been given, it will be seen that, in fact, no moneys were either withdrawn from, or returned to, that fund. The bills were cancelled, annexed to the warrants, and are lodged in the Treasury as vouchers of the transaction.

These bills were for two separate sums, each two millions four hundred and seventy-five thousand guilders, equal to a million of dollars; the payment having been divided into two parts, upon certain equitable considerations, relative to the dividend of the first half year.

This transaction explains four millions nine hundred and fifty thousand guilders of the sum which forms the disagreement between the memorandum in the Treasurer’s bank-book and the statement reported by me.

The residue is thus explained: The sum of one million two hundred and thirty-seven thousand five hundred guilders, directed to be drawn for, on the thirtieth of November, was directed to be comprised in one or more bills, as the bank should desire. It was at first placed in one bill, but this bill was afterward returned, with a request that it might be converted into smaller sums. The bill returned was cancelled, and, in lieu of it, there had been furnished, prior to the 1st of January, of the present year, nine hundred and thirty-four thousand five hundred guilders; the balance, three hundred and three thousand, then remaining to be furnished. The sum of nine hundred and thirty-four thousand five hundred guilders, consequently, appears twice in the memorandum.

These two sums, of four millions five hundred and ninety thousand, and nine hundred and thirty-four thousand guilders, exceed the difference in question, by one hundred and twenty-four thousand three hundred and sixty-two guilders.

The Treasurer informs me, that there are two bills not included in the memorandum: one for one hundred and twenty-three thousand seven hundred and fifty, and the other for six hundred and twelve guilders; which make up the above-mentioned excess. The former of these two bills was furnished to the Secretary of State for the purpose contemplated by the third section of the act of the last session, entitled “An act making certain appropriations therein specified.”

Is it not truly matter of regret that so formal an explanation, on such a point, should have been made requisite? Could no personal inquiry, of either of the officers concerned, have superseded the necessity of publicly calling the attention of the House of Representatives to an appearance, in truth, so little significant? Was it seriously supposable that there could be any real difficulty in explaining that appearance, when the very disclosure of it proceeded from a voluntary act of the head of this Department?

With perfect respect, I have the honor to be, sir,

Your most obedient and most humble servant,

Alexander Hamilton,

Secretary of the Treasury.

The Hon. Jonathan Trumbull, Esq.,

Speaker of the House of Representatives.

P. S.—Another statement of income and expenditure having been made, which presents the subject under another aspect, but agreeing in the result with the statement B is marked B a.1
loans
Communicated to the Senate, February 6, 1793.

Treasury Department,

February 5, 1793.
Sir:

In pursuance of the first part of the order of the Senate, of the 23d of January past, I have the honor to send, herewith, sundry statements, marked A, AB, B, Ba, D, E, F,2 and I beg the permission of the Senate to add the copy of a letter dated yesterday, which served to transmit duplicates of the same documents to the House of Representatives, and which contains some explanations of them, a repetition of which, here, will be, thereby, rendered unnecessary. The document C, referred to in that letter, was also sent to the House of Representatives, but being of considerable length a duplicate is not yet ready, and I did not think it advisable to detain the other papers till it was ready.

The documents, now transmitted, will answer the whole of the inquiry contained in the first part of the order above referred to, except what regards a distribution of the expenditures, under each head of appropriation, which is in preparation, and will be forwarded as soon as it can be ready.

The situation in which I am placed renders further delay absolutely necessary to the fulfilment of the second part of the order.

There is a point in my letter of the 16th of January to the Senate, concerning which some explanation is requisite. I stated, as one motive to the joint negotiation of the loans, under both acts, “an intimation from our bankers in Holland, that a distinction might prove an embarrassment, being a novelty, the reason of which would not be obvious to the money-lenders.” This was done from memory, without recurrence to documents, and in a degree of hurry occasioned by my anxiety for the speedy passing of the appropriation bill, and upon a revision, proves to be not accurate. The mistake arose in the following manner. My original idea was, to maintain a separation between the two acts. This will appear from my letter of the 28th of August, 1790, to our bankers, in which I express a desire that they would endeavor to place part of the first loan upon one act, and another part upon the other act. But they did not carry this idea into execution, for the reason assigned in their answer, now before the Senate; which is, that the subdivision proposed would, under the circumstances of the case, tend to excite speculations and doubts among the money-lenders.

But, prior to the receipt of their answer, I had made further inquiry, and had reflected more on the subject. the result of my inquiry was that the money-lenders, having been accustomed to lend on the general credit of the Government borrowing, with a sort of general pledge of its revenues and resources, the attempt to bottom a loan upon any particular law might, as a novelty, occasion some hesitation and embarrassment among them; especially as they are known to be a description of men much influenced by habit and precedent; and the conclusions, from more full reflection, were that the distinguishing of the loans with reference to each act might not only embarrass the business in the first stages of negotiation, but might interfere with an application of the proceeds of the loans in the most convenient and beneficial manner, according to circumstances.

On these considerations I abandoned my original intention, and in my first instruction to Mr. Short, was silent on the point.

These different positions of the subject in the mind, at different times, and what actually took place, with regard to the first loan, produced some confusion in the recollection of facts, and led me to assign as a cause what had been only a collateral circumstance, and to ascribe to the bankers intimations, or rather information, which I had received from other quarters.

I submit this explanation of the matter to the candor of the Senate, and have the honor to be with perfect respect,
Sir, your most obedient servant,

Alexander Hamilton.

The Vice-President of the United States and President of the Senate.
Communicated to the Senate, February 6, 1793.

Treasury Department,

February 5, 1793.
Sir:

By order of the President of the United States, I have the honor to transmit herewith:

1. Copies of a power given by him to the Secretary of the Treasury for the time being, dated the 28th of August, 1790, for the negotiation of the loans authorized by the laws of the 4th and 12th of August, 1790, and of certain instructions relative thereto, dated on the same day.

2. Copies of an authority, founded upon the power of the President, from me to William Short, Esquire, dated the 1st of September, 1790, and of sundry letters from me to the said William Short, of dates from the 29th of May, 1790, to the 31st of December, 1792, inclusively, relating to the negotiation and application of the above-mentioned loans.

3. Originals of sundry letters from William Short to me, under dates from the 2d of December, 1790, to the 2d of November, 1792, inclusively, relating to the same subject.

4. Copy of an authority from me to Messrs. Wilhem and John Willink, Nicholaas and J. Van Staphorst and Hubbard, bankers of the United States at Amsterdam, dated the 28th of August, 1790, relating to the first of the loans made under the above-mentioned acts, and copies of sundry letters to the said bankers, of dates from the 28th of August, 1790, to the 31st of December, 1792, inclusively.

5. Originals of sundry letters from the said bankers to me, of dates from the 25th of January, 1790, to the 5th of November, 1792.

6. Copies of sundry letters of dates from the 18th of June to the 24th of September, 1792, inclusively, between G. Morris and W. Short, Esquires, having relation to the above subjects.

The general power from the President to the Secretary of the Treasury, of the 28th of August, 1790, and the communications from William Short, Esquire, who has been the only commissioner, would, it is presumed, have fulfilled the terms of the resolution of the Senate of the 23d of last month, and are transmitted, pursuant to the request contained in that resolution.

But the President has been pleased to direct the transmission of the other documents also, in the supposition that they will serve to throw light upon the general subject of that resolution.

With perfect respect, I have the honor to be sir, yours, etc.

Alexander Hamilton,

Secretary of the Treasury.

The Vice-President of the United States and President of the Senate.

[Note.—Of the papers referred to in this report, none are now to be found, except those published with the Secretary’s second report, of the 13th of February, 1793, which follows.]
loans
Communicated to the House of Representatives, February 13, 1793.
Sir:

The next most important article of inquiry involved in the resolutions of the House of Representatives of the 23d of January last, and in the observations which have been made respecting the conduct of this Department, relates to the loans negotiated under the acts of the 4th and 12th of August, one thousand seven hundred and ninety.

The papers which have been transmitted to the House by order of the President disclose the following particulars:

1. That the immediate superintendence of the business of the loans was confided to the Department of the Treasury, being naturally connected with it. This trust, besides the original instructions for regulating the execution of it, which have been communicated, was of course subject to such directions, from time to time, as the President should think fit to give, or as occasions should require. A considerable latitude of discretion, nevertheless, from the very nature of the case, attended it, so as justly to leave, on the head of this Department, a complete responsibility in all instances where special exceptions do not appear.

2. That the first loan which was obtained was undertaken and completed by the agency of Wilhem and Jan Willink, and Nicholaas and Jacob Van Staphorst and Hubbard, who, both under the former and present Government, have been, and are, the bankers of the United States, at Amsterdam.

3. That, with the single exception of the first loan, William Short, Esq., then Chargè des Affaires at the court of France, now Resident Minister at the Hague, was constituted the sole agent of this Department for carrying into effect the powers confided to it; with this qualification only, that, if any negotiation with a prince or state, to whom any part of the debt to be discharged by the loans was due, should be requisite, the same was to be carried on through the person who, in capacity of Minister, Chargè des Affaires, or otherwise, then was, or thereafter might be, charged with transacting the affairs of the United States with such prince or state.

4. That all payments, which have been made out of the proceeds of the loans, have been made by the immediate and special order of Mr. Short, except those upon the bills of the Treasurer for the moneys drawn to this country, and those to the money-lenders in Holland, which were made in course by our bankers, at the periods they respectively became due. This consequently embraces all the payments to France; the very last of which, though agreed for by Mr. Morris, in consequence of his having been employed for a special purpose by Mr. Short, was not, and could not, be completed, but by the same immediate and special direction of Mr. Short.

It moreover appears, from the same papers, and more fully from the correspondence at large, now before the Senate, that, except in the particular instance which has been just stated, with regard to Mr. Morris, there has been no other agency in the whole business than that of Mr. Short, and of the bankers at Amsterdam and Antwerp, whom he necessarily employed as instruments in the negotiations with the money-lenders, and in the receipt and disbursement of the moneys borrowed. These, as already mentioned, were, at Amsterdam, the two houses of Wilhem and Jan Willink, and of Nicholaas and Jacob Van Staphorst and Hubbard; at Antwerp, a Mr. G. De Wolf was the banker.

It may not be without its uses to add, that the moneys proceeding from the loans have constantly remained in the hands of the respective bankers, till they have been paid over to the creditors; namely, the French treasury or their bankers, the money-lenders or their representatives, the holders of the bills drawn from this country by the Treasurer. Neither Mr. Short nor Mr. Morris has ever had possession of a single guilder. The latter, indeed, has never had power over one, excepting merely a sum of 105,000 guilders, by letter of mine, dated the 13th of September last, placed at his disposal for paying, at Paris, according to stipulation, the interest on the debt due to foreign officers. The fact is, and it is so demonstrated by the correspondence already referred to, that I never wrote a line to Mr. Morris on the subject of the loans or their proceeds, but in reference to the case just mentioned, of the interest payable to foreign officers, in respect to which, local situation governed.

One more circumstance only is necessary to be noticed in this place, with a view to the elucidation intended. It is this: that the last payment, though originating prior to the change in the political position of France, of the 10th of August last, not having been consummated till the 6th of September following, fell, of course, under the disposition of those then in possession of the power of the nation.

It could not but have been unexpected to me, that exception should be taken to the report lately made by me on the subject of foreign loans, for the omission of details which I did not, at the time, and do not yet conceive to have been called for, by the terms of the resolutions upon which it was founded. The request addressed to the President, by those resolutions, was, that he would cause to be laid before the House a particular account of the sums borrowed, under his authority, by the United States; the terms on which each loan was obtained; the applications which had been made of the moneys, agreeably to appropriations; the balances, if any, which remained unapplied; specifying, also, at what times interest commenced on the several sums obtained, and at what times it was stopped by the several payments made. It was not natural to imagine that these expressions were designed to comprehend a specification of the precise authorities under which the loans were negotiated, of the names of the persons by whom they were negotiated, of the particular place or places where the balances unexpended of the sums that had been drawn for to the United States were deposited. Still less natural was it for me to anticipate surmises, which could give to such particulars the shadow of importance. But, as animadversions have attended the omission of those details, I ought to regard it as an admonition to me to be more full and precise in my present communication—a motive which co-operates with my desire to throw all possible light upon the subject.

The first general circumstance which requires to be noticed and explained, after the particulars that have been communicated, is this: that all the loans which have been hitherto obtained have been made under the authority of both acts, without particular reference to either.

The idea originally entertained was to conduct them on a different plan, founding each loan upon one or the other of the acts, as will be seen by my letter of the 28th of August, 1790, to our bankers at Amsterdam; at the same time that it will appear, from the same letter, that the separation did not appear to me a matter of consequence, and that I anticipated the possibility of a difficulty in adhering to it in the particular case. That difficulty proved, in the opinion of the bankers, to be of sufficient moment to render the arrangement contemplated, under the circumstances of the case, unadvisable, as they inform me in their answer to the above-mentioned letter.

But, prior to the receipt of that answer, further inquiry and reflection had determined me to abandon my original idea, as likely to produce embarrassment and inconvenience, both in the negotiation of the loans and in the application of their proceeds. It was accordingly concluded to let the loans proceed indiscriminately, upon both acts.

These loans were to have reference to two purposes: first, the reimbursement of the foreign debt; second, the purchase of the domestic debt at its market price.

There were weighty reasons for carrying on both these operations concurrently. The arrears to France had been a considerable time accumulating. It was, in every sense, proper that a reimbursement of them should begin without delay, and desirable, for obvious reasons, that it should go on without any very considerable chasms or intermissions. This manner of proceeding could not but have the fairest chance of being the most satisfactory and convenient to France; unless, indeed, the business were to have proceeded upon the principle of an entire postponement of the domestic object to that of the reimbursement.

But very cogent reasons rendered this course not the most eligible; the early commencement of purchases of the debt was a matter of real and great importance.

It was important in two relations: as it regarded the advantages to the Government, from redeeming a portion of the debt at low prices; and still more, as it regarded the savings to the country from raising the price of stock on foreign purchasers; the beneficial influence upon the credit of the nation, abroad and at home, to be expected from a quick appreciation of the public obligations; the benefit to the public creditors in general, and to the most meritorious classes of them in particular, which would result from the same cause; all which objects were suggested from the Treasury, as motives to the provision respecting purchases, and are evidently contemplated in the preamble of the act which makes that provision.

Exclusive of the other advantages which have been cited, and which are of a nature truly precious and important, that of preventing foreigners from acquiring the property of our citizens, at a great undervalue, is too obvious not to be estimated, as it ought to be, at first sight. It cannot require argument to show how great an evil it was, that foreigners should be able to acquire, with nine or ten, that for which the country would ultimately have to pay them twenty, with full interest in the interval; nor how much it merited the attention of the Government to prevent or lessen so serious an evil.

But the influence which the purchases by the Government may have had upon this event may not be equally obvious. It is, however, not difficult to be traced. Price naturally keeps pace with competition and demand; whatever increases the latter necessarily tends to an augmentation of the former. Merely, then, as another purchaser, by adding to the competition and demand, the purchases of the Government were calculated to influence a rise of price. But they had an effect more than proportioned to their real extent. Imagination has much to do in all such questions, and in scarcely any thing so much as in what relates to public funds. Experience proves that it is here exerted with uncommon effect. The appearance of the Government, as a purchaser, has not failed to excite the expectation of a greater demand than was real, because the extent of the resources to be employed might be very great, and was unknown; which, by stimulating the zeal of those who wanted to buy, lest the price should rise suddenly and considerably upon them, and by encouraging those who wanted to sell, under the hope of a better price, to hold back the commodity, has, in both ways, generally contributed to give a spring to the market. Prices once raised, when founded on intrinsic value, tend to maintain themselves; because those who have given them are, for the most part, interested in keeping them up; and every new impulse which they receive serves to carry them rapidly to their just level.

Those who have been most attentive to the operation of the public purchases will have the least doubt that they had a material agency in accelerating the appreciation of the public stock.

An inquiry naturally arises here: Were the moneys which were drawn from Europe, on account of the foreign loans, the instrument of the purchases to which these beneficial effects are ascribed?

I answer, that these purchases are to be attributed to the instrumentality of that fund; that, had it not been for this resource, they could not have been made at the early periods when most of them were made. The course of the transaction will be fully, and with more propriety, explained in another place.

An attention to both objects—to the reimbursements to France, and to the purchases of the debt, rendered expedient a submission even of the first loan. Considerations of the moment seconded those of a general nature, to induce an immediate payment to that country. The loan had been undertaken without previous authority from hence, with a view to such payment; this was known, and a correspondent expectation excited. The immediate situation of the French finances rendered a payment, at the particular juncture, more than ordinarily interesting. In such a state of things, there could be no hesitation about applying a large part of the loan to that object. Another part of it was, of necessity, applied to the payment of the sums that were falling due on the Dutch loans; and it is presumed that the reasons which have been assigned will appear to have been sufficiently powerful to have dictated the drawing of a part of it to the United States.

Accordingly, a million and a half of the three millions borrowed were appropriated to France; something more than eight hundred thousand guilders were drawn for here, and the remainder of the loan was left to be disbursed in Holland.

It shall not be concealed, though I am aware that the acknowledgment may be a subject of criticism, that the conduct which was pursued, both with regard to this and to the succeeding loan, was, in some degree, influenced by a collateral consideration. The Government had but just adopted a plan for the restoration of public credit. The periodical payment of interest was to commence on the 1st of April, 1791. A considerable part of the revenue, out of which the moneys were to arise, was only to begin to accrue on the 1st of January preceding. This revenue was liable to credits of four, six, and twelve months.

How far its eventual product would answer expectation; how far the punctuality of payments could be relied upon, were points unascertained, and which required, to their ascertainment, much more experience than had been obtained. In such a situation it was not only natural, but necessary, for an administrator of the finances to doubt; and, doubting, it was his duty to call to the aid of the public credit every auxiliary which it was in his power to command. He was bound to reflect, that a failure in any stipulated payment would be fatal to the dawning credit of the country; to the reputation of the Government, just beginning to rise. That a wound inflicted upon either, at so early a stage, under all the circumstances of opposition to the Constitution, which had existed in the community, would have been deeply felt, and might either not have admitted of a cure at all, or not till after a length of time, and a series of mischiefs; that it could not but be an important service rendered to the country to ward off so great a misfortune by the temporary use of any extraordinary resource which might be at hand, till time was given for more effectual provision.

If, in the course of such reflections, a doubt had occurred about the strict regularity of what was contemplated as a possible resort, a mind sufficiently alive to the public interest, and sufficiently firm in the pursuit of it, would have dismissed that doubt, as an obstacle, suggested by a pusillanimous caution, to the exercise of those higher motives which ought ever to govern a man invested with a great public trust. It would have occurred that there was reasonable ground to rely, that the necessity of the case, and the magnitude of the occasion, would insure a justification, and that, if the contrary should happen, there remained still the consolation of having sacrificed personal interest and tranquillity, no matter to what extent, to an important public interest, and of having avoided the humiliation which would have been justly due to an opposite and to a feeble conduct.

The disposition which was resolved upon with regard to the first loan involved, necessarily, a decision of the point, that the loans might be placed on the joint foundation of both acts. That loan having been undertaken, as already mentioned, without previous authority, and, consequently, without a particular eye to either act, it was probable that it would be found too late to make an apportionment of one part of the sum borrowed to one act, of another part to the other act. In that case, the distributive application of the fund to the different objects was to be relinquished, or the possibility was to be admitted of the loan being left to stand upon the authority of both acts. The same disposition of the first loan will also illustrate the convenience and expediency of the plan which was finally adopted—that is, of placing the loans on the basis of both acts.

The idea of a concurrent execution of both the objects to which the loans were destined could not, conveniently, have been pursued upon the plan of a separation of the loans, which, to be effectual, would include the strict application of the proceeds of each to the purposes of the particular act upon which it was founded.

Amsterdam was naturally looked to as the great scene of the intended loans. There, as everywhere else, there is but a certain quantity of money floating in the market, from time to time, beyond the necessary demands of trade and industry, seeking for employment in loans. This quantity, of course, varies at different periods, from a variety of causes. Of the quantity at any time afloat, but a certain portion can be commanded by any one borrowing power, owing to the competition of other borrowers, who have, each, their connections, through their bankers, with different sets of undertakers and money-lenders. Nor is it always that considerable loans can be had, at any rate. There are certain seasons only, when they are practicable.

To have brought two loans upon the market at one time, as an opportunity of borrowing offered, which must have been the case in order to make concurrent provision for both the objects in question, if the principle of a separation of the loans had been adopted, would have been to exhibit to the money-lenders a very unusual appearance. With men known to be much influenced by precedent and habit, such an appearance could not have failed to prove a source of speculation and conjecture, and might have led to a confused idea that the wants of the United States were excessive—a supposition by no means calculated to promote their credit. It would, moreover, have been a departure from that simplicity of procedure which, where numbers are concerned, is always of moment to a right conception of the business to be accomplished, and ought not to be abandoned but for reasons of real utility and weight.

To have instituted the loans successively, founding each upon one or the other of the acts, would have had a tendency to occasion longer intervals between the payments to France than was desirable. The intervention of a loan for the purpose of purchases would have created, of course, a very considerable chasm. It may be objected, that such chasms did happen on the plan which was pursued. This is true, in two instances; but the most material of the two proceeded from casualties foreign to the plan itself, which are detailed in the correspondence more than once alluded to.

It is possible, too, that a separation of the loans might have rendered it less easy to take advantage of a state of the market favorable to their extension at a particular juncture. The loan to be brought on the market might relate to the purchase of the debt. The moment might be favorable to a more considerable loan than was within the limits prescribed for that object, and the opportunity might slip before a second could be instituted. In this business, moments are often of importance, and are to be embraced with promptitude and dexterity.

Thus, it appears that in different ways the negotiation of the loans might be embarrassed by their separation.

But the most obvious, if not the most serious, of the inconveniences which would have attended it, respects the application of the sums borrowed. This could not, then, have been moulded as the interest or policy of the Government might dictate. A loan for the purchase of the debt might have been made, under prospects promising a ready and beneficial investment of it; but, before the investment was made, a change of the market might render it ineligible, involving the alternative, either of a disadvantageous investment, or of leaving, perhaps, a large sum of money a long time unemployed. Such a state of things might have produced, to the banks, and advantage, and, to the Government, a loss, of magnitude sufficient to give color to a surmise that the public interest had been sacrificed to the profit of those institutions. The contrary course has essentially avoided that evil, which, in this and in other instances, would have been incident, in a far greater degree, to the modes of proceeding, contrasted with those that have been pursued, than has, in reality, attended them.

Or, political considerations might have rendered it advisable to transfer the application of the fund from one object to the other.

Of this, the case of St. Domingo presents an example. It might have happened, on the plan of separate loans, that there was no fund in hand but for the purchase of the debt. Then, on the principle of that plan, there would have been no fund in the disposition of the Executive, applicable to the other object, which would have embarrassed the performance of a duty toward a friendly Power, and, in a way which included the positive advantage to the country, of paying, directly, a part of its foreign debt in its own productions.

Such were the embarrassments avoided, and such the conveniences secured, by the plan of making the loans indiscriminately, upon the authority of both acts.

In the opposite plan, I can discern no counterbalancing advantage nor convenience.

Consequently, if both are equally legal, there can be no doubt which of them ought to have been preferred.

If there be any want of legality in the plan which has been pursued, I was not, at the time, and am not yet, sensible of it.

I know of no rule which renders it illegal in an agent, having, from the same principal, two authorities to borrow money, whether for one, or different purposes, to unite the loans he may make, upon the foundation of both authorities, provided the terms of them be consistent with both or either of his commissions. If the purposes are different, it will be incumbent upon him to take care that the application of the moneys borrowed makes the proper separation, and, doing this, he will have fulfilled his trust. To test this position, it seems only necessary to ask: Whether the principal, in such case, would not be fully bound to the lenders?

In reflecting, originally, upon the regularity of the proceeding meditated, there was but one source of hesitation—the difference in the funds upon which the loans were to rest. But the following reasoning satisfied the scruple. The pledging of particular funds is for the security of the lenders. If they are willing to waive the special security, by lending on the general credit of the Government, or to dispense with the preference of one fund to another, where two are pledged, by lending indiscriminately on the credit of both, the one or the other circumstance must be alike indifferent to the Government. The authority will have been well executed, to the extent necessary for public purposes, and if anything remains unexecuted, it will be in enlargement, not in abridgment, of the public rights. It is, however, presumed, that the practical construction, in the present case, will be, that the two funds pledged will constitute an aggregate for the joint security of the moneys borrowed upon both acts.

The second general circumstance respecting the foreign loans, negotiated under the acts of the 4th and 12th of August, which requires attention, relates to the terms on which they have been obtained. These, it appears, have been represented as neither honorable nor advantageous.

The following facts, witnessed by the correspondence before the Senate, more than once referred to, and well known to all who have had opportunities of information, demonstrate that the terms of those loans have been both honorable and advantageous.

1. There is not one of them, which originated under these acts, that was not effected upon conditions equally favorable with those attending the loans of the contemporary borrowing Powers of the most tried resources and best-established credit, and more favorable than were obtained by some Powers of great respectability.

2. The United States took a lead in the market, in regard to the subsequent reductions of interest, having had either earlier or more complete success than any other borrowing Power.

3. From a rate of five-per-cent. interest, and 4½ percent. charges, which marked the level of the market when they began their loans, they, in the course of a single year, brought down the terms to four-per-cent. interest, and five-per-cent. charges; that is, from an interest on the net sum received (including an indemnification for charges) of 5.5012, something more than 5½ per cent., to an interest on the like sum of 4.4951, something less than 4½ per cent.

When this state of things is applied to a Government only in the third year of its existence, and to a country which had so recently emerged from a total derangement of its finances, it would seem impossible to deny that the issue is not only honorable but flattering—unless, indeed, it can be denied, that a sound and vigorous state of credit is honorable to a nation.

I forbear a comparison between the loans of the present and of the former Government of this country, because an immense disparity of circumstances would render it an improper one,—further than to take notice of a very great error which has been on some occasions advanced. It has been alleged, to disparage the management under the present, that the loans of the former Government, in a situation comparatively very disadvantageous, have been effected upon equal terms; and, in proof of this, an appeal has been made to the loan of 2,000,000 of guilders, at four per cent., which is that of the 9th of March, 1784.

Nothing can manifest more clearly than this the very precipitate and superficial views with which suggestions on important public subjects are sometimes made. The last four-per-cent. loan obtained under the existing laws, including charges, is a real 4½ percent. loan, or, more exactly, a 4.4951-per-cent. loan. The four-per-cent. loan of March, 1784, is a real 6.6468-per-cent. loan. The difference, which exceeds two per cent., arises principally from extra premiums and gratifications which were allowed upon this loan, and which are unknown to the other.

Much praise is, no doubt, due to the exertions which effected the loans under the former Government. A superiority of merit shall readily be conceded to them from the circumstances under which they were made, and their signal utility in the Revolution. But it is not necessary to their eulogium to affirm that they were made upon equal terms with those of the loans lately obtained, or to deny the goodness of the terms of the latter. Truth will not justify the one or the other.

The facts which have been stated prove that the terms of the loans are advantageous as well as honorable. They are comparatively advantageous, because they are as moderate as other Powers, in the best credit, have allowed; and they are absolutely advantageous, because the highest real, not nominal, rate of interest which has been given does not exceed 5.5012—a fraction more than 5½ per cent.; while the lowest real rate is 4.4951—a fraction less than 4½ per cent.

If the question, whether advantageous or not, be tested by the purposes for which the loans have been made, the conclusion is equally in their favor. The payments on account of the foreign debt were an indispensable obligation. Unless it can be shown that they might have been derived from another and more advantageous source, it will follow that it was the interest of the Government to avail itself of the resource which has been employed, because it was its duty to discharge its obligations.

It is sometimes urged that foreign loans, for whatever purpose, are pernicious, because they serve to drain the country of its specie for the payment of interest, and for the final reimbursement of principal; that it would be preferable for that reason to procure loans at home, even at a higher rate of interest.

To this several answers may be given, some of a special, others of a general nature.

In reference to the reimbursement of the foreign debt it may be observed, that, as a debt had already been incurred abroad, upon which interest was payable, the contracting of new loans there for the reimbursement of that debt would leave us, as to the demand for the exportation of our specie, just where we originally stood.

Moreover, if the money could have been borrowed at home for that reimbursement, the remittance of it would have been ruinous to the country. The mere necessity of remitting could not alone have increased the foreign demand for our commodities, so as to deduce from an extra exportation of them the requisite means of payment; and, if our specie was to perform the office, the country would speedily have been exhausted to a degree inconsistent with the support of its commerce and industry. The quantity of coin in the United States has never been considerable enough for such an operation.

But this very state of things would have rendered the procuring of the money, from domestic resources, impracticable. These, it may be safely affirmed, are too limited for extensive loans, of any considerable degree of permanency.

In the last place: The expedient of domestic loans would not prevent the evil which is desired to be prevented. Foreigners would either, in the first instance, bring their moneys to subscribe them to the loans, or they would afterwards purchase the stock arising from them; and, in either case, they would equally draw away the money of the country on account of their interest and principal. The only consequence of giving a disproportionate rate of interest for domestic loans would be, that our specie would be carried away so much the faster.

Experience having shown that nations sometimes pay more regard to their external than to their internal credit, this consideration co-operates with reasons of convenience, to induce moneyed men abroad to be content with a lower rate of interest, stipulated to be paid in their own country, than if the place of payment be in another country, making even a greater difference than is an equivalent for the expense and risk of obtaining remittances.

The clear inference from these observations is, that, with regard to the reimbursement of the foreign debt, no other expedient than that of foreign loans was practicable or eligible.

The utility of that part of the loans which has reference to the purchase of the debt has already been explained in certain views. So far as their agency has been, hitherto, concerned in that operation, it is a sufficient demonstration of the advantage of the measure to state, that the sum invested in purchases, up to the period of the last report to Congress, has redeemed what is equal to an annuity of 6.15 per cent., including, also, the advantage of sinking a capital more than fifty per cent. greater than the sum expended.

A valuable profit will arise from the investment of the sums on hand, either in a payment to the bank or in the purchase of stock. The liberation of an annuity of six per cent. can be secured, while, upon a great part of the fund which is to effect it, no more than 4½ per cent. is payable, and less than 5½ upon the other part. The mean of these rates being five per cent., an annual saving of one per cent. may be effected, which, upon 2,000,000 of dollars, interest at five per cent., is equal to a capital or gross sum of 400,000 dollars—an item certainly of no inconsiderable consequence.

Against the advantages which are claimed in favor of the loans, it is natural to place the loss of interest incident to the delays which have attended their application to the purposes for which they were obtained. This leads to an examination of the cases of delay, their causes, and the circumstances, if any, which counterbalance them.

There are three instances of material delay: one respecting the first loan, another the second loan, and a third a part of the two last loans.

The first loan, it will be seen, was not applied till a considerable time after its commencement. It has been already intimated, that it was undertaken without previous authority from this country. The motives to the measure are detailed in a letter from our bankers, of the 25th of January, 1790, a copy of which accompanies the communications herewith made by order of the President. A regard to those motives led to an acceptance of the loan. Nor could it have been deemed an unfortunate circumstance, that such an auxiliary to the operations of the Treasury had been previously prepared.

The laws authorizing the loans passed the 4th and 12th of August. As early as the 28th of that month, the acceptance above mentioned was communicated, and the application of 1,500,000 florins, in a payment to France, directed. So far, no time was lost, more than could not have been avoided.

But the bills for the sum to be brought here were not drawn till some months after. This proceeded from an unwillingness to risk the public credit by drawing before there was a certainty of funds to answer the drafts. It was not impossible that the great delay which had attended the passing of the law for borrowing, might have led the bankers to come to some arrangement with the money-lenders for surrendering the moneys paid in, and terminating the loan. Independent of this source of apprehension, they had expressed themselves, in their letter communicating the step they had taken, to this effect: “To spare the United States all possible advance of interest, while the money shall remain unappropriated, we shall issue the recipisses at the option of the buyers to take them so late as they please, on the expectation the three millions would be placed in a few months.” This, though it announced an expectation that the moneys would be paid in, in a few months, did not render the event certain. And as the bankers appeared, from that precaution, to have adverted to the idea of saving the United States an advance of interest, it was supposable that they might have found means still further to procrastinate the payments, or a considerable part of them, till they had received a confirmation of the loan. This policy would have been the more natural, as they risked the loss of interest themselves, if the transaction should not have been finally ratified.

Under such circumstances, I thought it most prudent to defer the drafts till advice was received of the actual progress of the loans. There was no room to hesitate between the loss of a small sum in interest and the danger of committing the public credit by a permature operation.

The second case of delay relates to the second loan. It was occasioned by a determination to suspend the orders for its application till information was received of its having been contracted for.

One motive to this determination has been already intimated—namely, the yet untried and immature state of our fiscal arrangements. The general reasoning on this head was strengthened by an occurrence altogether unlooked for, which disclosed itself on the 23d of August, 1790, eleven days after the rising of Congress—an occurrence which they had not contemplated in their pecuniary dispositions. I allude to the commencement of an Indian war, which was announced in a letter from Governor St. Clair, dated on the above-mentioned day, the progressive extent and consequences of which could, of course, not be foreseen. Under such circumstances, I judged it for the public interest and safety to hold the resource which the prospect of a loan presented under the power of the Treasury till advice should be received of the actual institution of the loan, with intention then to dispose of it as should appear advisable under a better-matured view of our pecuniary situation and prospects.

Hence the delay which attended the application of the second loan; the first, in fact, that originated subsequent to the laws for borrowing. But after advice had been received of its having been set on foot, no time was lost in converting it with due despatch to its proper uses. There was only not an anticipation of its application. As early as May 24th, 1791, I wrote a letter to Mr. Short (a copy of which is in the possession of the House), empowering him to apply the proceeds of all future loans, as they should accrue, in payments to France, except as to such sums as therein were, or afterward should be, previously and specially reserved. This arrangement was calculated to obviate the inconvenience of leaving the proceeds of the loans for any considerable time unemployed. At the period of making it, and not sooner, the public prospects appeared to me sufficiently unfolded to render a general and permanent disposition free from hazard. This instruction preceded, in due season, all the loans subsequent to that of March, 1791.

Whatever delay, therefore, may have attended succeeding investments for paying the French debt, is not attributable to this Department; and I think it will not appear that any has been incurred in respect to the sums which were destined for the public service here. In judging of this point, it will be proper to observe that a latitude of six months for making their payments has been reserved to the money-lenders, though with liberty to make them earlier. It was, however, necessary for the Treasury to regulate its bills according to the possible delay, lest they should not meet adequate funds. The general policy adopted was to let them fall upon the rear of each loan, this giving a freer course for early payments to France, and best conciliating a certainty of funds for answering the bills with as little double interest as possible.

It will appear that, notwithstanding the arrangement which was made, a considerable time intervened between the two last payments to France, while there were funds in hand waiting for employment. It may be expected that the causes of this procrastination, though, as I have said, not imputable to this Department, should be unfolded to the House. Particular circumstances, however, induce me to confine myself to stating generally that the delay proceeded, in the first place, from an expectation given to Mr. Short, and kept up, from time to time, by the French Minister of Marine, that a plan would be adopted, to which a decree of the National Assembly was requisite, for converting a large sum into supplies for St. Domingo; which Mr. Short concluded justly must come out of the foreign fund, and consequently suspended its application in Europe. In the second place, from a desire to settle, previously to further payments, a definite rule, by which the moneys paid should be liquidated and credited to the United States.

Both the one and the other appear to have been procrastinated from period to period, by the disordered state of French affairs, and to have finally issued contrary to expectation. It would be an unnecessary commitment of my opinion to declare how far the delay appears to me to have been justified by the causes; but, being led by the occasion to take notice of it, I think it improper to send it abroad, liable, perhaps, to misconstruction, without observing that the inducements appear to me to have been weighty; that the delays naturally grew out of the circumstances; and that I am entirely pursuaded of the goodness of the motives which governed. The correspondence before the Senate contains the particulars of the transaction.

Having pointed out the instances of material delay which happened, and the causes of them, it remains to state what circumstances there are to counter-balance the loss on that account.

These circumstances are of two kinds:

1. Gain by exchange in the sale of the bills drawn by the Treasury, and upon the higher rate of interest on the credits which were given for those bills, than was payable on the fund upon which they were drawn.

2. Gain by exchange on the payments to France.

According to my calculation, founded on the best information extant, the real par of metals, between the United States and Amsterdam, makes a current guilder equal to 35 39/100 ninetieths of a dollar. The lowest rate which has been obtained for the bills has been 36 4/11 ninetieths, with an allowance of sixty days’ credit, without interest. Making a deduction for the interest, the bills were still sold above the true par. In some instances, they have been sold as high as forty cents and seven mills per guilder, with interest for the whole term of the credit given.

The rate of interest, for the credits allowed upon the bills, was six per cent.; the mean interest paid upon the fund, five per cent.; producing, consequently, a gain of one per cent.

With regard to the payments to France, if the current rate of exchange between Paris and Amsterdam, at the moment of each remittance or payment were to govern, a large profit would result to the United States; but certain equitable considerations will produce deductions, which will greatly lessen this advantage; yet, making a liberal allowance for them, there is ground to calculate that a saving may be made in this particular, more than sufficient to indemnify for the loss of interest. Hence any positive advantage which will have been otherwise gained will probably be undiminished by that circumstance.

I proceed, in the next place, to state the views which prevailed, respecting the sums that have been from time to time drawn for, the purposes they have hitherto answered, and the further advantages to be expected from the measure.

The direct object of all the sums drawn for, prior to July, 1792, was the purchase of the debt. A collateral consideration, which operated in the first stages of drawing, has also been mentioned. It has likewise been stated that the early purchases of the debt are to be ascribed to the instrumentality of the fund derived from the loans. This idea shall now be explained.

Two mistakes appear to have influenced the impressions which have been entertained in relation, directly or indirectly, to this subject. First, it seems to have been all along forgotten that a considerable part of the duties is always outstanding, on account of the credits which are given; whence the assertion that the sinking fund has continually overflowed from domestic resources. Second, it seems to have been taken for granted that the proceeds of the loans have remained apart, distinct from the mass of the money in the Treasury; while, in truth, the course of the business has been to turn them over to the Treasurer by warrants as they have been received, so as to form a part of the aggregate, from time to time, appearing in his hands and in his accounts. The banks have been the agents employed for selling the bills. Sometimes warrants on account have issued upon them for the sums accruing from the sales; at other times the warrants have been deferred till the whole proceeds of any parcel have been received, and the accounts of the bank settled at the Treasury; as the state of the Treasury has happened to render the one or the other more convenient.

The banks of North America and New York were the agents for the sale of all the bills which were sold prior to April, 1792, amounting to 1,006,526 dollars and 36 cents. Of this sum, 361,391 dollars and 34 cents were passed over to the Treasury in 1791; 327,136 dollars and 22 cents in March, 1792; and 140,000 dollars in June following; the residue having remained, as heretofore stated, in deposit with the Bank of North America, upon a special consideration. This is exclusive of certain bills furnished for the use of the Department of State, amounting to 78,766 dollars and 67 cents.

The remainder of the bills which have been sold, beginning in April, 1792, were sold by the Bank of the United States, and its branches at New York and Baltimore. The accounts of the sales had just been made out for settlement when the present inquiry began, but warrants had not yet issued for placing the proceeds in the Treasury. It will be remarked that, from the terms of credit allowed, they only began to be receivable in October last, the 26th day of which month the first return made by the bank shows a sum of 127,225 dollars and 53 cents received, and that the collection had not been completed when the accounts of the sales were rendered.

There are different views of the subject which will enable the House to perceive that the possession of the fund in question was necessary to enable the Treasury to furnish the means of making all the purchases which were made prior to July, 1792.

It is true that there was a surplus of revenue to the end of the year 1790, equal to 1,374,656 dollars and 40 cents, which was appropriated to purchases of the debt; and, from the credits then given upon the duties, this surplus would naturally come into the Treasury in the course of the year 1791.

But the Legislature, foreseeing that the revenue of 1791, from the same cause, could not actually be in the Treasury within that year, to face the appropriations upon it (which, it is to be observed, were nearly commensurate with the fund), inserted a clause in the law appropriating the surplus of 1790 to the purchase of the debt, which authorized a reservation of so much of that surplus as might be necessary to make the payments of interest during 1791, in cases of a deficiency in the receipts into the Treasury, on account of the current revenue of the year.

It will appear to the House, upon a recurrence to the Treasurer’s quarterly account, ending the 30th of September, 1791, that the balance of cash then on hand was 662,233 dollars and 99 cents.

At that time there had been paid into the Treasury, upon warrants, from the proceeds of the bills drawn upon the foreign fund, 361,391 dollars and 34 cents; consequently the balance of cash, had it not been for that auxiliary, would have been only 300,842 dollars and 65 cents, considering the whole balance in the Treasury as representing an equal sum of the proceeds of the bills.

Even in a time of complete peace, in a country where a small extent of moneyed capital forbids a reliance upon large pecuniary aids to be suddenly obtained, a prudent administrator of the finances could not feel entirely at ease with a less sum, at all times in the certain command of the Treasury, than 500,000 dollars, for meeting current demand and extra exigencies, which, in the affairs of a nation, are every moment to be expected. But, with a war actually on hand, and a possibility of its extension to a more serious length, he would be inexcusable in leaving himself with a less sum at command, unless from an impracticability of doing otherwise. It would be always his duty to combine two considerations—the chance of extra calls for money, and a possibility of some failure in the receipts which were expected. Derangements of various kinds may happen in the commercial circle, capable of interrupting, for a time, the punctual course of payments to the Treasury. It is necessary, to a certain extent, to be prepared for such casualties.

But during the year 1791 there was a circumstance which operated as an additional reason for keeping a respectable sum always on hand. The loans of the domestic debt were going on till the last of September of that year; while, at the same time, the interest was in a course of payment. It was, therefore, always uncertain what sum would be payable at the end of a quarter, this depending on the eagerness or backwardness of the public creditors in bringing forward their subscriptions or their claims as non-subscribers. The omissions at the end of a preceding quarter might be expected to fall upon a subsequent one; and it was necessary to be prepared for that possibility; of course, to keep in hand a larger fund for contingent demands. This necessity extended to the termination of the period for receiving subscriptions; because the Treasury was to be prepared on the supposition that the whole of the domestic debt would then be in a state to receive interest, either as subscribed or unsubscribed But this did not, in fact, happen. A part of the sums which were presented were crowded into the last days of the quarter, and were too late for a dividend. A considerable sum remained ultimately in a form which, according to the terms of the provision, did not entitle it to interest, either as subscribed or as unsubscribed debt.

Hence the cash in the Treasury on the 1st of October, 1791, was by a considerable sum greater than was to have been counted upon, or than might have happened.

The conclusion which results from the foregoing observations is this: that the purchases which preceded the 1st of October, 1791, and which amounted to 699,984 dollars and 23 cents in specie, could not have been hazarded, but for the aid of the sums which had actually accrued from the proceeds of the bills and the expectation of those which were to accrue from the yet uncollected proceeds of others.

Had it not been for this aid, the Treasury would have been left more bare than was consistent with the security of public credit and the certain execution of the public service.

There is, however, a later period in the state of the Treasury, which will more completely illustrate the idea intended to be established. This is the 2d of July, 1792.

On that day the balance of cash in the Treasury, comprehending the deposits in all the banks, and including a sum of 200,000 dollars received on loan of the Bank of the United States, together with a sum of 220,900 dollars in bills drawn upon domestic funds, the proceeds of which had not been received, was 623,133 dollars and 61 cents.

Prior to this period a further sum of 545,902 dollars and 89 cents, arising from the sales of foreign bills, had been placed in the Treasury by warrants, making, with the former sums placed there from the same source, 907,294 dollars and 23 cents.

Had it not been for this auxiliary and that of the loan from the bank, the Treasury would then have been in arrears 484,160 dollars and 62 cents. It, therefore, necessarily follows that for the purchases to that period, which amounted in specie to 942,672 dollars and 54 cents, at least 484,160 dollars and 62 cents must have come from the foreign fund.

But when it is considered, for the reasons which have been stated, and which will hereafter be fortified by others, tending, as I conceive, to give them conclusive force, that the sum in the Treasury at the period in question was barely what ought to have been there for safety and for a due supply of current demands, it will follow that the whole, or nearly the whole, of the purchases which were made previous to July, 1792, were made by the means or instrumentality of the foreign fund.

A similar view, extended to the subsequent quarter, will exhibit this point in a still clearer light. The balance then in the Treasury, including a further loan from the bank of 100,000 dollars, was only 420,914 dollars and 51 cents.

What, then, it may be asked, became of the surplus revenue to the end of the year 1790? what was the office performed by that fund during the period in question?

The answer is that it served exactly the purpose which was anticipated by the Legislature. It came in aid of the current receipts for satisfying the current expenditures of 1791, with particular reference to the interest of the debt. This will easily be comprehended when it is recollected that the appropriations made during 1791 upon the revenues of that year, and some small surpluses of antecedent appropriations, amounted to 3,637,058 dollars and 34 cents; that the revenues themselves amounted to no more than 3,553,195 dollars and 18 cents; and that, at the end of 1791, there were outstanding, in bonds for the duties on imports, besides the chief part of the proceeds of the duties on spirits distilled within the United States, then also uncollected, 1,828,269 dollars and 28 cents.

On this point, likewise, of the surplus of revenue to the end of 1790, it is presumable a misapprehension has been entertained. It seems to have been supposed that that surplus, as well as the proceeds of the foreign fund, have been kept separate and distinct from the common mass of the moneys appearing from time to time to be in the Treasury.

It has been already observed that this was not the case with regard to the foreign fund. It is now proper to add that it has not been the case either with regard to the surplus question. That surplus, as received by the collectors of the customs, has regularly passed into the Treasury, and appears in the quarterly accounts of the Treasurer for the periods to which they relate.

It is the course of the Treasury, resulting from the constitution of the Department, for all moneys, from whatever source, to be brought into it, to constitute an aggregate, subject to the dispositions prescribed by law. The moneys to be employed in the sinking fund have consequently only been separated, as they have been called for, for actual investment. The only exception to this relates to that part of the sinking fund which is created by the interest of the debt purchased. This has been included in the quarterly dividends, and covered by the warrants in favor of the cashiers of the banks for paying those dividends, after which they have passed into a distinct account in the books of the bank opened with Samuel Meredith as agent to the commissioners of the sinking fund.

To the foregoing representation it may seem an objection that the purchases to the end of 1791 appear to have been carried to the account of the surplus at the end of 1790.

The ultimate form which it has been judged convenient to give to the transaction in the accounts of the Treasury cannot change what was truly the course of facts. The proceeds of the above-mentioned surplus and of the foreign loans formed together the fund for purchases. In the accounts of the Treasury the thing was susceptible of various modifications at pleasure. The two parts of the fund might have been united in one account, or divided into distinct accounts. Being separated, moneys issued for purchases might have been legally carried to either of them.

It was judged most advisable in the forms of the Treasury to place the purchases to the end of 1791 to the account of the domestic fund, because it was calculated to give greater latitude and energy to the sinking fund. Had not this course been pursued the business would have taken the following shape: the foreign fund, to the extent of the purchases, would have been exhausted; the whole, or the greater part of the surplus of 1790, would have continued wrapt up in the expenditure of 1791, not liable to be liberated till the receipts into the Treasury should yield a correspondent surplus beyond the actual disbursements—which could not have been the case while the war with the Indians continues to call for extraordinary expenditures.

From the form into which the thing has been thrown, the foreign fund has been set free to be applied to further purchases; and a necessity produced of anticipating the outstanding duties by temporary loans for the current service.

I trust there can be no doubt that the course pursued was regular and within the discretion of the Department. I hope, also, that it will appear to the House to have been the most eligible. The expediency of giving the earliest and greatest possible extent and activity to whatever concerns the sinking fund will, it is presumed, unite all opinions.

What has been said hitherto respecting the employment of the foreign fund is applicable only to that part of it which was drawn for prior to April, 1792; the residue standing in a different situation, and requiring a separate examination.

From the statement which has been given, it may be perceived that the fund in question has neither been idle nor useless. A confirmation of this will be found in the following details:

The whole sum successively received on account of Amsterdam bills, up to the 17th of August, 1791, was 361,391 dollars and 34 cents. The amount of the moneys invested in purchases prior to that day was 350,000 dollars, chiefly by anticipation of those receipts.

The whole sum successively received on account of Amsterdam bills, from August 17, 1791, to March 1, 1792, was 408,722 dollars and 69 cents. The amount of the moneys invested in purchases between those periods was 349,984 dollars and 23 cents, chiefly in the month of September, and by anticipation of those receipts.

The whole sum successively received on account of Amsterdam bills, subsequent to the 1st of March, and prior to July, 1792, was 235,412 dollars and 33 cents. The amount of the moneys invested in purchases between those periods was 242,688 dollars and 31 cents.

It was stated in my first letter, that 177,998 dollars and 80 cents of the proceeds of the foreign bills were left in deposit with the Bank of North America; and in a note upon statement B, accompanying that letter, the occasion of it was shown to be an advance without interest, made by that bank, for the use of the Department of War; which could not yet be covered, in consequence of a doubt still remaining, whether the fund appropriated for satisfying that object was adequate to it—the sufficiency of that fund depending in part on certain unexpended residues of antecedent appropriations, which it was expected would not be finally necessary for satisfying the purposes of those appropriations.

It is to be remarked, that the delay of the employment of this part of the proceeds of the foreign fund has been compensated by a saving of interest on the sum advanced by the bank, which otherwise must have been procured upon a loan with an allowance of interest, probably at the time of the advance, at a rate of six per cent.; so that, even in this particular, the fund, though temporarily suspended from its destination, has not been idle or unproductive. I reserve for another place some additional observations and statements, which will be calculated to shew that opportunities of investing the moneys at any time on hand, applicable to purchases of the debt, were not suffered to pass unimproved, and that as much in this respect was done as the state of the Treasury and the state of the market would permit.

It has been said, that a distinct examination would be proper with regard to the bills which have been drawn upon the foreign fund subsequent to March, 1792. I proceed now to this examination.

The expediency of what has been, in this respect, done, seems to have been called in question, under a suggestion, that an application of the fund to purchases had ceased to be advantageous.

The drawing of these bills has been at different periods influenced by various considerations. A leading motive was always the purchase of the debt. And a correct view of the subject will, I doubt not, satisfy the House, that the measure was recommended by an adequate prospect of advantage.

It is to be observed, that all these drafts were predicated upon the two four-per-cent. loans; being, as already stated, real 4½ percent. loans.

There was good ground to presume, that opportunities would be found of investing the moneys drawn for in purchases which would yield at least five per cent. with a possibility of doing still better. The difference of ½ per cent. was alone an object of importance; but it would be coupled with the further benefit of reducing a principal sum materially exceeding the sum invested. When the three per cents are purchased at 12s. in the pound, there is not only a redemption of an annuity of five per cent. but a sinking of a capital of 20s. for 12s. And though this might not be material, if the market rate of interest should never fall below five, because in that case the three per cents might always be purchased at the same rate; yet if it should at any time happen, that interest fell below five, it would be a gain to the Government to have purchased at five, in exact proportion to the difference between five and the then market rate. Add to this, that the three per cents have generally a value in the market more than proportioned to the income they produce, which arises from the capacity of the capital to appreciate even to par. These observations are also for the most part applicable to the deferred, with this circumstance in addition, that, when interest begins to be payable on that species of stock, the money invested, and which, in the meantime, would have produced five, would then begin to produce to the Government six per cent., with the advantage of having anticipated the redemption of a species of stock of right only gradually redeemable. Combining these considerations, it appears to be clearly and even eminently for the interest of the Government to purchase within the limit suggested, with a fund which does not cost more than 4½ per cent.

That this was the view of the subject which governed, is deducible not only from the circumstances of the fact, but from my letter of the 2d of April, 1792, to Mr. Short, announcing my intention to draw, in which I assign as the ground of that intention, “that I considered it for the interest of the United States to prosecute purchases of the public debt with moneys borrowed on the terms of the last loan,” meaning the loan of the 1st of January, 1792, at four per cent.

If the event be taken as a criterion, the anticipation will be more than justified, the present juncture offering an opportunity for purchases peculiarly advantageous.

But, without insisting on a state of things occasioned by extraordinary circumstances, it was morally certain that the common course of events would render the operation a beneficial one. And it would not argue peculiar foresight, if a calculation was even made on the effect which the situation and probable progress of affairs in Europe might produce upon our market. A pretty general war there, by extending the demand for money, would naturally divert from our stocks a portion of what might otherwise be employed upon them, and affect injuriously their prices. It is also a familiar fact that, during the winter, in this country, there is always a scarcity of money in the towns—a circumstance calculated to damp the prices of stock.

A consideration, which collaterally influenced the drawing of the later bills, was the situation of the French colony of St. Domingo.

This not only produced an early application for a considerable advance, which was promised, but it was to be foreseen, that still further aids would be indispensable.

Indeed, sundry letters from Mr. Short, the first dated at Paris, the 28th of December, 1791, announced the daily probability of an arrangement requiring an advance here of 800,000 dollars for the use of that colony. A sum of 4,000,000 of livres has in fact been successively stipulated for that object, the greatest part of which has been actually furnished.

It is known that these supplies could proceed from no other source than the foreign fund.

The payment to the foreign officers of near 200,000 dollars, by which an interest of six per cent. would be released, was another object for which provision was to be made out of the same fund.

These several purposes conspired with the object of purchasing the debt to induce the latitude of drawing which took place.

But there was still a further inducement which came in aid of the others. The time for reimbursing the first instalment of the two millions of dollars due to the bank was approaching, when, by positive stipulation, the Government would have to pay two hundred thousand dollars, for which there was no domestic fund that could be spared from the current exigencies. I thought it incumbent upon this Department to have an eye to placing within the reach of the Legislature the means of fulfilling this engagement; the object of which bore a strict analogy to that for which the two millions authorized by the act making provision for the reduction of the public debt were to be borrowed.

I did not even scruple to take into the calculation, that if, from the extent of the draughts upon the foreign fund, there should happen to be found on hand a larger sum than was necessary for, or could be advantageously employed towards, the several purposes which were the immediate and direct objects of the operation, the surplus would facilitate to the Government a measure manifestly and unequivocally beneficial—an additional payment to the bank, on account of a debt upon which an annual interest of six per cent. was payable; a measure by which a certain saving of one per cent., to the extent of the payment that might be made, would be accomplished.

The possibility of this application of the fund afforded a perfect assurance, that the public interest could in no event fail to be promoted.

I felt myself the more at liberty to do it, because it did not interfere with a complete fulfilment of the public engagements in regard to the foreign debt. It could be done consistently with a full reimbursement of all arrears and instalments which had accrued on account of that debt.

The detail which has been given comprehends a full exposition of the views and motives that have regulated the conduct of this Department in relation to those parts of the proceeds of the foreign loans which have been transferred to the United States, except as to the last sum of 1,237,500 florins, directed to be drawn for on the 30th of November last; in regard to which, circumstances of a special nature co-operated, as is explained in a note upon the copy of my letter of the 26th of that month to Mr. Short, forming a part of the communication herewith made by order of the President of the United States.

The House will perceive that the variety of matter comprised in this letter has not been collected and digested into its present form, without much labor and unavoidable expense of time. I trust they will be sensible that no delay has been unnecessarily incurred. It is certain that I have made every exertion in my power, at the hazard of my health, to comply with the requisitions of the House as early as possible. And it has even been done with more expedition than was desirable to secure the perfect accuracy of the communication.

Yet I have still to regret that some part of the subject must remain to be presented in a subsequent letter. To lessen, however, the inconvenience of this further delay, I shall transmit with the present letter the statements required by the first and second of the resolutions of the 23d of January, which will be found in the schedules herewith, marked Nos. I. to V.; those required by the last of the resolutions having been already forwarded.

There remain, however, some particulars to complete the information contemplated by those resolutions, that must be reserved for another communication. This I may venture to assure the House will not be deferred beyond the present, or at least the first day of the ensuing, week.
With perfect respect, I have the honor to be, sir, Your most obedient and most humble servant,

Alexander Hamilton,

Secretary of the Treasury.

The Honorable the Speaker of the House of Representatives.

No. I.—A statement of the appropriation for reducing the public debt, constituted by the act of Congress passed on the 12th day of August, 1790.

No. II.—A statement of the application of the funds drawn on the appropriation of the surplus of duties to the end of the year 1790, for the reduction of the public debt.

No. III.—A statement of the application of the fund constituted by the act of Congress, passed on the 8th of May, 1792, for reducing the public debt, arising from the interest on the sums of said debt purchased, redeemed, and paid into the Treasury of the United States.

No. IV.—Quarterly statement of cash in the hands of the Treasurer of the U. S. for the year 1791.

No. V.—Statement of cash in the Treasury, during the year 1792, showing the balance on hand half monthly.—State Papers, “Finance,” vol. i., 210–214.
Communicated to the House of Representatives.

Treasury Department,

February 13, 1793.
Sir:

In obedience to an order of the President of the United States, founded upon the requests contained in two resolutions of the House of Representatives of the 23d of January last, I have the honor to lay before the House—

1. The several papers numbered 1, 2, 3, 4, being copies of the authorities under which loans have been negotiated, pursuant to the acts of the 4th and 12th of August, 1790.

2. Sundry letters, as per list at foot, from the Secretary of the Treasury to William Short, Esq., and to Wilhem and J. Willink, N. and J. Van Staphorst and Hubbard, being copies of the authorities respecting the application of the moneys borrowed.

3. Statement A, showing the names of the persons by whom, and to whom, the respective payments of the French debt have been made in Europe, specifying the dates of the respective payments and the sums. With regard to the precise dates of the respective drafts which may have been drawn, or orders which may have been given by Mr. Short to our bankers for making those payments, they cannot be furnished, not being known at the Treasury. It is, however, to be inferred from the correspondence and circumstances that they preceded but a short time the respective payments to which they related.

Statement B, showing by whom the payments have been made, on account of the Dutch loans, the dates, and the sums. As to the persons to whom the payments were made, no specification is practicable, these being the numerous subscribers to the several loans, their agents or assignees. It has never been considered, either under the former or present Government, as interesting to the Treasury to know who those individuals were. Indeed, by the transfers always going on, they are continually changing. The demand for a communication of their names would have been unprecedented, and the disclosure from time to time would have been attended with a great deal of useless but expensive trouble.

The statement desired in reference to the Spanish debt cannot be furnished. In a note upon statement No. 1 of my late report concerning foreign loans it is mentioned, “that advice had been received that the payment of this debt was going on, though it had not been completed. “This appears by letters from Mr. Short, now before the Senate, dated August 30th and October 9th and 22d. No advice of the completion of the payment has been since received. All that is known is that our bankers were procuring bills, under orders from Mr. Short, for the purpose of remitting to Spain the sum necessary to discharge her debt.

There will be seen a difference in the statement now presented and No. 1 of my late report concerning foreign loans, as to the date of the last payment to France. In one the 9th of August is mentioned; in the other, the 6th of September. The fact is that it had its inception some time in August, but was not perfected till the 6th of September. Mr. Morris, who had been charged by Mr. Short with endeavoring to adjust with the French Treasury the rule by which the payments that had been and might be made should be liquidated into livres, having regard to certain equitable considerations, made an arrangement with it, provisionally, for the payment of 1,641,2501. florins, and wrote to Mr. Short requesting that he would direct the payment to be completed. There appear to have been two letters from Mr. Morris on the subject, one dated the 6th, the other the 9th of August. But Mr. Short, for reasons which he explains in his correspondence, now before the Senate, did not consummate the payment till the 6th of September. One statement has reference to the beginning, the other to the conclusion, of the affair.

I am instructed by the President to observe that there are some circumstances in the communications now made which would render a public perusal of them not without inconvenience.
With perfect respect, I have the honor to be, sir, Your most obedient and most humble servant,

ALEXANDER HAMILTON,
No. 1
George Washington, President of the United States of America, to the Secretary of the Treasury for the time being.

By virtue of the several acts, the one entitled “An act making provision for the debt of the United States,” and the other entitled “An act making provision for the reduction of the public debt,” I do hereby authorize and empower you, by yourself, or any other person or persons, to borrow, on behalf of the United States, within the said States, or elsewhere, a sum, or sums, not exceeding, in the whole, fourteen millions of dollars, and to make, or cause to be made for that purpose, such contract, or contracts, as shall be necessary, and for the interest of the said States, subject to the restrictions and limitations in the said several acts contained; and, for so doing, this shall be your sufficient warrant.

In testimony whereof I have caused the seal of the United States to be hereunto affixed.

Given under my hand, at the city of New York, this twenty-eighth day of August, in the year of our Lord one thousand seven hundred and ninety.
George Washington.
By the President:

Th. Jefferson.
No. 2
George Washington, President of the United States of America, to the Secretary of the Treasury for the time being.

Having thought fit to commit to you the charge of borrowing, on behalf of the United States, a sum, or sums, not exceeding, in the whole, fourteen millions of dollars, pursuant to the several acts, the one entitled “An act making provision for the debt of the United States,” and the other entitled “An act making provision for the reduction of the public debt,” I do hereby make known to you that, in the execution of the said trust, you are to observe and follow the orders and directions following, viz.: Except where otherwise especially directed by me, you shall employ, in the negotiation of any loan, or loans, which may be made in any foreign country, William Short, Esq. You shall borrow, or cause to be borrowed, on the best terms which shall be found practicable (and within the limitations prescribed by law as to time of re-payment and rate of interest), such sum, or sums, as shall be sufficient to discharge, as well all instalments, or parts of the principal of the foreign debt which now are due, or shall become payable to the end of the year one thousand seven hundred and ninety-one, as all interest and arrears of interest which now are or shall become due, in respect to the said debt, to the same end of the year one thousand seven hundred and ninety-one. And you shall apply, or cause to be applied, the moneys which shall be so borrowed, with all convenient despatch, to the payment of the said instalments, and parts of the principal and interest, and arrears of the interest of the said debt. You shall not extend the amount of the loan which you shall make, or cause to be made, beyond the sum which shall be necessary for completing such payment unless it can be done upon terms more advantageous to the United States than those upon which the residue of the said debt shall stand or be. But if the said residue, or any part of the same, can be paid off by new loans, upon terms of advantage to the United States, you shall cause such further loans as may be requisite to that end to be made, and the proceeds thereof to be applied accordingly. And for carrying into effect the objects and purposes aforesaid, I do hereby further empower you to make, or cause to be made, with whomsoever it may concern, such contract or contracts, being of a nature relative thereto, as shall be found needful, and conducive to the interest of the United States.

If any negotiation with any prince or state to whom any part of the said debt may be due should be requisite, the same shall be carried on through the person who, in capacity of Minister, Chargé des Affaires, or otherwise, now is, or hereafter shall be charged with, transacting the affairs of the United States with such prince or state; for which purpose I shall direct the Secretary of State, with whom you are in this behalf to consult and concert, to co-operate with you.

Given under my hand, at the city of New York, this twenty-eighth day of August, in the year of our Lord one thousand seven hundred and ninety.

Geo. Washington.
No. 3
To all to whom these presents shall come:

Whereas by an act passed the fourth day of August, in this present year, entitled “An act making provision for the debt of the United States,” it is, among other things, enacted, that the President of the United States be authorized to cause to be borrowed, on behalf of the United States, a sum, or sums, not exceeding, in the whole, twelve millions of dollars, and that so much of that sum as may be necessary to the discharge of the said arrears and instalments, and (if it can be effected upon terms advantageous to the United States) to the paying off the whole of the said foreign debt, be appropriated solely to those purposes; and that the President be, moreover, further authorized to cause to be made, such other contracts respecting the said debt as shall be found for the interest of the said States: Provided, nevertheless, that no engagement or contract shall be entered into, which shall preclude the United States from reimbursing any sum or sums borrowed, within fifteen years after the same shall have been lent or advanced:

And whereas, by another act, passed the twelfth day of August, in the present year, entitled “An act making provision for the reduction of the public debt,” it is also, among other things, enacted, that the President of the United States be authorized to cause to be borrowed, on behalf of the United States, a sum, or sums, not exceeding in the whole two millions of dollars, at an interest not exceeding five per cent.:

And whereas, by virtue of the said several acts, the President of the United States of America hath been pleased, by a certain commission or warrant, under his hand, to authorize and empower the Secretary of the Treasury for the time being, by himself, or any other person or persons, to borrow, on behalf of the United States, within the said States, or elsewhere, a sum, or sums, not exceeding, in the whole, fourteen millions of dollars, and to make, or cause to be made, for that purpose, such contract or contracts as shall be necessary, and for the interest of the said States, subject to the restrictions and limitations in the said several acts contained: And whereas Messrs. Wilhem and Jan Willink, and Nicholaas and Jacob Van Staphorst and Hubbard, have, by letter, bearing date the twenty-fifth day of January, 1790, communicated to me, that they have entered into a certain provisional agreement, or arrangement, for a loan of three millions of florins, for the use of the United States of America, bearing an interest of five per centum per annum, and reimbursable by yearly instalments of six hundred thousand florins, commencing in the year one thousand eight hundred and one, and ending in the year one thousand eight hundred and five: And whereas it appears to me for the interest of the said United States to accept the said loan:

Now, therefore, be it known: That I, Alexander Hamilton, Secretary of the Treasury of the United States for the time being, by virtue of the power and authority in me vested, by the said President of the United States, and in his name, and on behalf of the United States of America, and to their use, do, by these presents, accept, agree to, ratify, and confirm the loan aforesaid, provisionally undertaken by the said Wilhem and Jan Willink, and Nicholaas and Jacob Van Staphorst and Hubbard. And I do hereby authorize and empower the said Wilhem and Jan Willink, and Nicholaas and Jacob Van Staphorst and Hubbard, or, in case of the death of any of them, the survivors, to borrow, on behalf of the United States, either by way of confirmation of the said provisional agreement, or otherwise, as need may be, a sum, or sums, not exceeding, in the whole, three millions of florins, subject to the restrictions and limitations in the said several acts contained and above recited; and for that purpose, in the name of the said President, on behalf of the United States of America, to execute such contracts, obligations, and instruments as shall be necessary, and conformable to usage, in the like cases, and the faith of the United States to pledge for the performance of the terms thereof; and if the same shall be deemed requisite, to stipulate for the ratification thereof by the President of the United States; hereby giving and granting to the said Wilhem and Jan Willink, and Nicholaas and Jacob Van Staphorst and Hubbard, and the survivors of them, all my power and authority in the premises, and ratifying, allowing, and confirming whatsoever they shall lawfully do therein.

In testimony whereof, I have caused the seal of the Treasury to be affixed to these presents, and have hereunto subscribed my hand, the twenty-eighth day of August, in the year of our Lord one thousand seven hundred and ninety.

Alexander Hamilton,

Secretary of the Treasury.
No. 4
To all to whom these presents shall come:

Whereas, by an act passed the fourth day of August, in this present year, entitled “An act making provision for the debt of the United States,” it is, among other things, enacted, that the President of the United States be authorized to cause to be borrowed, on behalf of the United States, a sum, or sums, not exceeding, in the whole, twelve millions of dollars, and that so much of that sum as may be necessary to the discharge of the said arrears and instalments, and (if it can be effected upon terms advantageous to the United States) to the paying off the whole of the said foreign debt, be appropriated solely to those purposes; and that the President be, moreover, further authorized to cause to be made such other contracts respecting the said debt as shall be found for the interest of the said States: Provided, nevertheless, that no engagement or contract shall be entered into which shall preclude the United States from reimbursing any sum or sums borrowed, within fifteen years after the same shall have been lent or advanced:

And whereas, by another act, passed the twelfth day of August, in the present year, entitled “An act making provision for the reduction of the public debt,” it is, also, among other things, enacted that the President of the United States be authorized to cause to be borrowed, on behalf of the United States, a sum, or sums, not exceeding, in the whole, two millions of dollars, at an interest not exceeding five per cent.:

And whereas, by virtue of the said several acts, the President of the United States of America hath been pleased by a certain commission or warrant, under his hand, to authorize and empower the Secretary of the Treasury for the time being, by himself, or any other person or persons, to borrow, on behalf of the United States, within the said States, or elsewhere, a sum, or sums, not exceeding, in the whole, fourteen millions of dollars, and to make, or cause to be made, for that purpose, such contract or contracts as shall be necessary, and for the interest of the said States, subject to the restrictions and limitations in the said several acts contained:

Now, therefore, know ye: That I, Alexander Hamilton, Secretary of the Treasury of the United States for the time being, by virtue of the said commission, power, or warrant of the President of the United States of America, have authorized and empowered, and by these presents do authorize and empower, William Short, Chargé des Affaires of the United States at the court of France, to borrow, on behalf of the United States, in any part of Europe, a sum, or sums, not exceeding, in the whole, fourteen millions of dollars, and to make, or cause to be made, for that purpose, such contract or contracts as shall be necessary, and for the interest of the said States, subject to the restrictions and limitations in the said several acts contained; and for so doing this shall be his sufficient warrant.

In testimony whereof, I have caused the seal of the Treasury to be affixed to these presents, and have hereunto subscribed my hand, the first day of September, in the year of our Lord one thousand seven hundred and ninety.

Alexander Hamilton,

Secretary of the Treasury.

A.—Statement showing the dates and sums of the respective payments which have been made on account of the debt due to France, out of the Dutch and Antwerp loans; and by whom, and to whom, the moneys were remitted or paid.

B.—Statement showing the respective payments which have been made by William and John Willink, Nicholas and Jacob Van Staphorst and Hubbard, in Amsterdam, to individuals, upon the several loans made in Holland, on account of the United States.

[1]These resolutions, following certain others offered a month before, were introduced to discredit and break down Hamilton. They were instigated by Jefferson, with the advice and assistance of Madison, and were brought forward in the House by their tool, Giles. This and the following reports, which answered everything completely, were prepared with incredible rapidity, and effectually crushed the assailants.

[1]For these statements in full, see State Papers, “Finance,” vol. i., p. 188, et seq.

[1]For these schedules see State Papers, “Finance,” vol. i., p. 196.

[2]For these statements, see State Papers, “Finance,” vol. i., pp. 187–190; 195–200.

[1]1,625,000 Banco.

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