hamilton To Washington
8th June, 1793.
Sir:—I have the honor to send you a report on the communication from the Minister Plenipotentiary of France, respecting the reimbursement of the residue of the debt of the United States to that country, altered in conformity to your desire; and to be, with perfect respect, etc.
June 8, 1793.
The Secretary of the Treasury, to whom was referred a communication from the Minister Plenipotentiary of the Republic of France, on the subject of the debt of the United States to France, respectfully makes thereupon the following report:
The object of this communication is to engage the United States to enter into an arrangement for discharging the residue of the debt which they owe to France by an anticipated payment of the instalments not yet due, either in specie or bank bills of equal currency with specie, or in government bonds bearing interest and payable at certain specified periods, upon condition that the sum advanced shall be invested in productions of the United States for the supply of the French dominions.
With regard to the first expedient, namely, a payment in specie or bank bills, the resources of the Treasury of the United States do not admit of its being adopted. The government has relied for the means of reimbursing its foreign debt on new loans to be made abroad. The late events in Europe have thrown a temporary obstacle in the way of these loans—producing, consequently, an inability to make payment, by anticipation of the residue of the debt hereafter to grow due.
With regard to the second expedient, that of government bonds payable at certain specified periods, this in substance, though in other forms, has repeatedly come under consideration, and has as often been declined as ineligible. Great inconveniences to the credit of the government, tending to derange its general operations of finance, have been and must continue to be perceived, in every plan which is calculated to throw suddenly upon the market a large additional sum of its bonds. The present state of things, for obvious reasons, would serve to augment the evil of such a circumstance; while the existing and possible exigencies of the United States admonish them to be particularly cautious, at this juncture, of any measure which may tend to hazard or impair their credit.
These considerations greatly outweigh the advantage, which is suggested as an inducement to the measure (the condition respecting which, is the principal circumstance of difference between the present and former propositions), to arise from an investment of the sum to be advanced in the products of the country; an advantage on which perhaps little stress can be laid, in the present and probable state of foreign demand for those products.
The motives which dissuade from the adoption of the proposed measure may, it is conceived, be the more readily yielded to from the probability that the utility of it to France might not, on experiment, prove an equivalent for the sacrifices which she might have to make in the disposition of the bonds.