TO THE COMMISSIONERS OF THE TREASURY.
Amsterdam, March 29, 1788.
Gentlemen, * * * * * *
I cannot close my letter without some observations on the transfer of our domestic debt to foreigners. This circumstance and the failure to pay off Fiseaux' loan, were the sole causes of the stagnation of our late loan. For otherwise, our credit would have stood on more hopeful grounds than heretofore. There was a condition in the last loan, that the lenders furnished one-third of the money, the remaining two-thirds of the bonds should remain eighteen months unsold, and at their option to take or not, and that in the meantime the same bankers should open no other loan for us. These same lenders became purchasers of our domestic debt, and they were disposed to avail themselves of the power they had thus acquired over us as to our foreign demands, to make us pay the domestic one. Should the present necessities have obliged you to comply with their proposition for the present year, I should be of opinion it ought to be the last instance. If the transfer of these debts to Europe, meet with any encouragement from us, we can no more borrow money here, let our necessities be what they will. For who will give ninety-six per cent. for the foreign obligations of the same nation, whose domestic ones can be bought at the same market for fifty-five per cent.; the former, too, bearing an interest of only five per cent., while the latter yields six. If any discouragements can be honestly thrown on this transfer, it would seem advisable, in order to keep the domestic debt at home. It would be a very effectual one, if, instead of the title existing in our treasury books alone, it was made to exist in loose papers, as our loan office debts do. The European holder would then be obliged to risk the title paper of his capital, as well as his interest, in the hands of his agents in America, whenever the interest was to be demanded; whereas, at present, he trusts him with the interest only. This single circumstance would put a total stop to all future sales of domestic debt at this market. Whether this, or any other obstruction, can or should be thrown in the way of these operations, is not for me to decide; but I have thought the subject worthy your consideration.
I have the honor to be, with sentiments of the most perfect esteem and respect, Gentlemen, your most obedient, and most humble servant.
TO MR. SHORT.
Amsterdam, March 29, 1788.
Dear Sir,—I have received from you three letters of March the 9th, 14th, and 17th, and written you two of the 10th and 13th. In the last, I mentioned to you that I should leave this place the 13th but I have been drawn on from day to day by the hope of seeing the business on which I came settled, on the basis of positive engagement, and the great object of the month of June appeared so sure, that we were about proceeding to immediate payment of Mr. Grand, the State of Virginia, and all smaller claims, when a letter of the 20th February, from the Commissioners of the Treasury, arrived, forbidding the application of money to any object except the diplomatic expenses, till the cash for the June interest was actually in hand. No room was left for the bankers to execute their discretion. The consequence is a delay of all other objects for some weeks, which probably might have been effected instantly, without danger to the great one. Indeed, I had obtained a positive engagement on that ground. Be so good as to communicate this much to Mr. Grand.