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Subject Area: Economics
Subject Area: Political Theory
Topic: The American Revolution and Constitution

to william seton (Private.) - Alexander Hamilton, The Works of Alexander Hamilton, (Federal Edition), vol. 9 [1774]

Edition used:

The Works of Alexander Hamilton, ed. Henry Cabot Lodge (Federal Edition) (New York: G.P. Putnam’s Sons, 1904). In 12 vols. Vol. 9.

Part of: The Works of Alexander Hamilton, (Federal Edition), 12 vols.

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to william seton
(Private.)

  • Philadelphia,

I send you herewith an official letter; this private one I write as explanatory of it. I hardly expect that you will be able to procure the debt within the limits prescribed, and yet I do not know what effect the imprudent speculations in bank scrip may produce. A principal object with me is to keep the stock from falling too low in case the embarrassinents of the dealers should lead to sacrifices; whence you will infer that it is not my wish that the purchases should be below the prescribed limits, yet if such should unfortunately be the state of the market, it must of course govern. The limits assigned for the purchases of 3-per-cents and deferred debt are founded on a calculation of the government rate of interest being 5 per cent. The same rule has not been extended to the stock bearing an immediate interest of 6 per cent., because the government have a right to redeem it at par in certain proportions; and though to individual purchasers it is worth more than par, because a part only can be redeemed, yet it is not at present the interest of the government to give more than par for it, because of the right to redeem a part. Indeed, the law limits the commissioners in this particular. You will recollect that the act requires that the purchases should be made openly. This has been construed to mean by a known agent for the public. When you make a purchase, therefore, it will be proper that it should be understood that it is on account of the United States, but this need not precede the purchase; and it will be best that there should be no unnecessary demonstration, lest it should raise hopes beyond what will be realized.

P. S.—If the prices of stocks should exceed the prescribed limits, you may retain the letter to the directors. If there are any gentlemen who support the funds and others who depress them, I shall be pleased that your purchases may aid the former,—this in great confidence.