Chapter 30

The board of treasury had, in the month of December, informed me and our bankers here, that it would be impossible for them to make any remittances to Europe for the then ensuing year, and that they must, therefore, rely altogether on the progress of the late loan. But this, in the meantime, after being about one-third filled, had ceased to get forward. The bankers who had been referred to me for advice by Mr. Adams, stated those circumstances, and pressed their apprehension for the ensuing month of June, when two hundred and seventy thousand florins would be wanting for interest. In fine, they urged an offer of the holders of the former bonds to take all those remaining on hand, provided they might receive out of them the interest on a part of our domestic debt, of which they had also become the holders. This would have been one hundred and eighty thousand florins. To this proposition I could not presume any authority to listen. Thus pressed between the danger of failure on one hand, and this proposition on the other, I heard of Mr. Adams being gone to the Hague, to take leave. His knowledge of the subject was too valuable to be neglected under the present difficulty, and it was the last moment in which we could be availed of it. I set out immediately, therefore, for the Hague, and we came on to this place together, in order to see what could be done. It was easier to discover, than to remove, the causes which obstructed the progress of the loan. Our affairs here, like those of other nations, are in the hands of particular bankers. These employ particular, and they have their particular circle of money lenders. These money lenders, as I have before mentioned, while placing a part of their money in our foreign loans, had at the same time employed another part in a joint speculation, to the amount of eight hundred and forty thousand dollars, in our domestic debt. A year's interest was becoming due on this, and they wished to avail themselves of our want of money for the foreign interest, to obtain payment of the domestic. Our first object was to convince our bankers, that there was no power on this side the Atlantic which could accede to this proposition, or give it any countenance. They at length, therefore, but with difficulty, receded from this ground, and agreed to enter into conferences with the brokers and lenders, and to use every exertion to clear the loan from the embarrassment in which this speculation had engaged it. What will be the result of these conferences, is not yet known. We have hopes, however, that it is not desperate, because the bankers consented yesterday to pay off the capital of fifty-one thousand florins, which had become due on the first day of January, and which had not yet been paid. We have gone still further. The treasury-board gives no hope of remittances, till the new government can procure them. For that government to be adopted, its legislature assembled, its system of taxation and collection arranged, the money gathered from the people into the treasury, and then remitted to Europe, must extend considerably into the year 1790. To secure our credit then, for the present year only, is but to put off the evil day to the next. What remains of the last loan, when it shall be filled up, will little more than clear us of present demands, as may be seen by the estimate enclosed. We thought it better, therefore, to provide at once for the years 1789 and 1790, also; and thus to place the Government at its ease, and her credit in security, during that trying interval. The same estimate will show, that another million of florins will be necessary to effect this. We stated this to our bankers, who concurred in our views, and that to ask the whole sum at once, would be better than to make demands from time to time so small, as that they betray to the money holders the extreme feebleness of our resources. Mr. Adams, therefore, has executed bonds for another million of florins; which, however, are to remain unissued till Congress shall have ratified the measure; so that this transaction is something or nothing, at their pleasure. We suppose its expediency so apparent, as to leave little doubt of its ratification. In this case, much time will have been saved by the execution of the bonds at this moment, and the proposition will be presented under a more favorable appearance, according to the opinion of the bankers. Mr. Adams is under a necessity of setting out to-morrow morning, but I shall stay two or three days longer, to attend to and encourage the efforts of the bankers; though it is yet doubtful whether they will ensure us a safe passage over the month of June. Not having my letters here to turn to, I am unable to say whether the last I wrote mentioned the declaration of the Emperor that he should take part in the war against the Turks. This declaration appeared a little before, or a little after that letter, I do not recollect which. Some little hostilities have taken place between them. The court of Versailles seems to pursue immovably its pacific system, and from every appearance in the country from which I write, we must conclude that its tragedy is wound up. The triumph appears complete, and tranquillity perfectly established. The numbers who have emigrated are differently estimated, from twenty to forty thousand.

A little before I left Paris, I received a piece of intelligence, which should be communicated, leaving you to lay what stress on it, it may seem to deserve. Its authenticity may be surely relied on. At the time of the late pacification, Spain had about fifteen ships of the line nearly ready for sea. The convention for disarming did not extend to her, nor did she disarm. This gave inquietude to the court of London, and they demanded an explanation. One was given, they say, which is perfectly satisfactory. The Russian Minister at Versailles, getting knowledge of this, became suspicious on his part. He recollected that Spain, during the late war, had been opposed to the entrance of a Russian fleet into the Mediterranean, and concluded if England was not the object of this armament, Russia might be. It is known that that power means to send a fleet of about twenty-four ships into the Mediterranean this summer. He sent to the Count de Montmorin, and expressed his apprehensions. The Count de Montmorin declared that the object of Spain in that armament, was totally different; that he was not sure she would succeed; but that France and Spain were to be considered as one, and that the former would become guarantee for the latter; that she would make no opposition to the Russian fleet. If neither England nor Russia be the object, the question recurs, who is it for? You know best if our affairs with Spain are in a situation to give jealousy to either of us. I think it very possible that the satisfaction of the court of London may have been pretended, or premature. It is possible, also, that the affairs of Spain in South America, may require them to assume a threatening appearance. I give you the facts, however, and you will judge whether they are objects of attention or of mere curiosity.

I have the honor to be, with sentiments of sincere esteem and respect, Sir, your most obedient, and most humble servant.

P. S. I enclose herewith an extract of a letter from the Count de Vergennes to the French Ambassador at the Hague, which will make a remarkable chapter in the history of the late revolution here. It is not public, nor should be made so by us. Probably those who have been the victims of it, will some day publish it.

TO MR. DUMAS.

AMSTERDAM, March 29, 1788.

SIR,--I have now to acknowledge the receipt of your favors of the 14th, 18th and 23d instant. I would have preferred doing it in person, but the season, and the desire of seeing what I have not yet seen, invite me to take the route of the Rhine, I shall leave this place to-morrow morning, and probably not reach Paris till the latter end of April. In the moment we were to have conferred on the subject of paying the arrears due to you, a letter of the 20th of February from the Board of Treasury was received, forbidding the application of money to any purpose, (except our current claims,) till the June interest should be actually in hand. Being by the letter tied up from giving an order in your favor, I return you the letter you had written to Mr. Jay, on the supposition that the order for your arrears was given. It has been suggested, however, that if you could receive bonds of the loan, you could make them answer your purpose, and the commissioners say this would in no wise interfere with the views of the treasury board, nor the provision for the June interest. I have, therefore, recommended to them in writing, to give you bonds to the amount of your balance, if you choose to take them, rather than to wait. I wish this may answer your purpose. I remember that in the conversation which I had the honor of having with you, on the evening I was at the Hague, you said that your enemies had endeavored to have it believed that Congress would abandon you, and withdraw your appointments. An enemy generally says and believes what he wishes, and your enemies particularly, are not those who are most in the councils of Congress, nor the best qualified to tell what Congress will do. From the evidences you have received of their approbation, and from their well-known steadiness and justice, you must be assured of a continuance of their favor, were they to continue under the present form. Nor do I see anything in the new government which threatens us with less firmness. The Senate, who will make and remove their foreign officers, must, from its constitution, be a wise and steady body. Nor would a new government begin its administration by discarding old servants; servants who have put all to the risk, and when the risk was great, to obtain that freedom and security under which themselves will be what they shall be. Upon the whole, my dear Sir, tranquillize yourself and your family upon this subject. All the evidence which exists as yet, authorizes you to do this, nor can I foresee any cause of disquiet in future. That none may arise, that yourself and family may enjoy health, happiness, and the continued approbation of those by whom you wish most to be approved, is the sincere wish of him, who has the honor to be, with sentiments of sincere esteem and attachment, your most obedient, and most humble servant.

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.

A letter from Mr. Van Berkel, at New York, confirms the arrival of the Count de Moustier there on the 18th of January, and removes all suspense and anxiety on that subject. You know we received a similar account the day before I left Paris, which I communicated to M. de Montmorin. It is with infinite affliction that I recollect, in the hurry of my departure, to have omitted to have notified the same to M. Dupont, who had a son embarked in the same bottom. I am haunted with this recollection, and would beg either yourself or Mr. Grand, whichever sees M. Dupont first, to let him know that it was neither want of attention nor attachment to him which occasioned it to escape me, but the confusion which attended the setting out on such a journey on so short notice.

I set out to-morrow for Utrecht, Nimeguen, etc., and shall pursue the course of the Rhine as far as the roads will permit me, not exceeding Strasburg. Whenever they become impassable, or too difficult, if they do become so, I shall turn off to Paris. So also if anything of importance should call for me at Paris sooner, you will be so good as to address to me at Frankfort and Strasburg. I will call at the post office there, and be happy to find news from you relative to yourself, my daughters, and America. I shall be at Frankfort about the 8th of April, and at Strasburg about the 15th. You shall hear from me on the road.

* * * * * * * *

TO GENERAL WASHINGTON.

PARIS, May 2, 1788.

DEAR SIR,--I am honored with your Excellency's letter by the last packet, and thank you for the information it contains on the communication between the Cayahoga and Big Beaver. I have ever considered the opening a canal between those two water courses as the most important work in that line which the State of Virginia could undertake. It will infallibly turn through the Potomac all the commerce of Lake Erie, and the country west of that, except what may pass down the Mississippi; and it is important that it be soon done, lest that commerce should, in the meantime, get established in another channel. Having, in the spring of the last year, taken a journey through the southern parts of France, and particularly examined the canal of Languedoc, through its whole course, I take the liberty of sending you the notes I made on the spot, as you may find in them something, perhaps, which may be turned to account, some time or other, in the prosecution of the Potomac canal. Being merely a copy from my travelling notes, they are undigested and imperfect, but may still perhaps give hints capable of improvement in your mind.

The affairs of Europe are in such a state still, that it is impossible to say what form they will take ultimately. France and Prussia, viewing the Emperor as their most dangerous and common enemy, had heretofore seen their common safety as depending on a strict connection with one another. This had naturally inclined the Emperor to the scale of England, and the Empress also, as having views in common with the Emperor, against the Turks. But these two powers would, at any time, have gladly quitted England, to coalesce with France, as being the power which they met everywhere, opposed as a barrier to all their schemes of aggrandisement. When, therefore, the present King of Prussia took the eccentric measure of bidding defiance to France, by placing his brother in law on the throne of Holland, the two empires immediately seized the occasion of soliciting an alliance with France. The motives for this appeared so plausible, that it was believed the latter would have entered into this alliance, and that thus, the whole political system of Europe would have taken a new form. What has prevented this court from coming into it, we know not. The unmeasurable ambition of the Emperor, and his total want of moral principle and honor, are suspected. A great share of Turkey, the recovery of Silesia, the consolidation of his dominions by the Bavarian exchange, the liberties of the Germanic body, all occupy his mind together, and his head is not well enough organized, to pursue so much only of all this as is practicable. Still, it was thought that France might safely have coalesced with these powers, because Russia and herself, holding close together, as their interests would naturally dictate, the Emperor could never stir but with their permission. France seems, however, to have taken the worst of all parties, that is, none at all. She folds her arms, lets the two empires go to work to cut up Turkey as they can, and holds Prussia aloof, neither as a friend nor foe. This is withdrawing her opposition from the two empires, without the benefit of any condition whatever. In the meantime, England has clearly overreached herself. She excited the war between the Russians and Turks, in hopes that France, still supporting the Turks, would be embarrassed with the two empires. She did not foresee the event which has taken place, of France abandoning the Turks, and that which may take place, of her union with the two empires. She allied herself with Holland, but cannot obtain the alliance of Prussia. This latter power would be very glad to close again the breach with France, and, therefore, while there remains an opening for this, holds off from England, whose fleets could not enter into Silesia, to protect that from the Emperor. Thus, you see, that the old system is unhinged, and no new one hung in its place. Probabilities are rather in favor of a connection between the two empires, France and Spain. Several symptoms show themselves, of friendly dispositions between Russia and France, unfriendly ones between Russia and England, and such as are barely short of hostility between England and France. But into real hostilities, this country would with difficulty be drawn. Her finances are too deranged, her internal union too much dissolved, to hazard a war. The nation is pressing on fast to a fixed constitution. Such a revolution in the public opinion has taken place, that the crown already feels its powers bounded, and is obliged, by its measures, to acknowledge limits. A States General will be called at some epoch not distant; they will probably establish a civil list, and leave the government to temporary provisions of money, so as to render frequent assemblies of the national representative necessary. How that representative will be organized is yet uncertain. Among a thousand projects, the best seems to me, that of dividing them into two Houses, of Commons and Nobles; the Commons to be chosen by the Provincial Assemblies, who are chosen themselves by the people, and the Nobles by the body of Noblesse, as in Scotland. But there is no reason to conjecture that this is the particular scheme which will be preferred.

The war between the Russians and Turks, has made an opening for our Commodore Paul Jones. The Empress has invited him into her service. She insures to him the rank of rear admiral; will give him a separate command, and, it is understood, that he is never to be commanded. I think she means to oppose him to the Captain Pacha, on the Black Sea. He is by this time, probably, at St. Petersburg. The circumstances did not permit his awaiting the permission of Congress, because the season was close at hand for opening the campaign. But he has made it a condition, that he shall be free at all times to return to the orders of Congress, whenever they shall please to call for him; and also, that he shall not in any case be expected to bear arms against France. I believe Congress had it in contemplation, to give him the grade of admiral, from the date of his taking the Serapis. Such a measure now would greatly gratify him, second the efforts of fortune in his favor, and better the opportunities of improving him for our service, whenever the moment shall come in which we may want him.