to rufus king
April 2, 1793.
My Dear Sir:
When you are acquainted with all the facts, I think you will alter the opinion you appear to entertain. My application comes literally within your rule. The loan is necessary for the current expenditure, independent of any new advance to France, or of purchases of the debt. This has arisen from my having been under the necessity of remitting to Holland, for a payment in June of 1,000,000 guilders, as an instalment of the principal, and 470,000 guilders for interest of the Dutch debt.
Late advices rendering it problematical whether a loan could be obtained for the purpose of the instalment, it became necessary to make this remittance to avoid danger to the public credit.
Hence, without a loan from the bank, I ought to calculate upon a deficiency in the present quarter (remember we are in April) of 672,023 dollars and 26 cents, and in the next, of 325,447 dollars and 28 cents.
This is the result of as accurate a view of receipts and expenditures as can now be taken. You will anticipate that, by all the expenditures not falling actually within the periods to which they are applicable, the real deficiency would not be so great as the calculated; but you will, at the same time, perceive that the view given supposes a state of the Treasury which renders an auxiliary indispensable.
At the same time, I cannot but think that you apply your principle too rigorously. I ought not to be forced to divert for a length of time funds appropriated for other purposes, to the current expenditure. To compel this would be, in substance to withhold the means necessary for the public service; for it would oblige the Treasury to employ an adventitious resource, which ought not be so employed, and that too at a time when it could be employed advantageously, according to its original and true destination. I therefore think, independent of the real exigency, the bank ought to make the loan.
The loans to government stand on very different considerations from those to individuals. Besides the chartered privileges, which are the grant of the government, the vast deposits constantly on hand, and which ordinarily exceed the loans from the bank, frequently very greatly, are an advantage which, generally speaking, bears no proportion to the advantages of the dealings between individuals and the bank. Consider, too, what has been the state of things for some time past, and the real sacrifices which have been made not to distress the institution.
If for such accommodations equivalent services are not to be rendered, they could not easily be defended.
Besides, from the necessity of having a considerable sum on hand in the Treasury, and the natural course of the business, the bank is pretty sure of having always on deposit a large part of what it lends to the government. This does not exist in any thing like the same degree, in the case of individuals.
You seem to calculate that the past advances will not be replaced. On the contrary, it is my intention, pursuant to stipulation, to repay as fast as the funds come in applicable to it; and in the last quarter of the year I hope to make a considerable progress in the reimbursement; till then, it will not be practicable.
I do not know whether Mr. Kane stated to you the nature of my proposal. It was that the payments should be made in four equal monthly instalments—the first on the first of June—and that each instalment should be reimbursed in six months. The real advance of the bank will be very temporary indeed before greater sums will come into its vaults from the duties. In the last quarter of the present and the first quarter of the ensuing year, very large receipts may be expected.
You are sure that while I seek to put myself in a proper posture, I shall not fail to have a due regard to the safety of the institution.
It is much to be wished that I could be enabled to make some purchases, though this will not be the case with the loan in question, unless a loan shall also have been obtained in Europe.
A meeting of the commissioners has lately been called by Mr. Jefferson, out of the course heretofore practised, in which I have been pressed to declare whether I had or had not funds applicable to purchases. I answered so as to be safe. But you readily perceive the design of this movement. There is no doubt in my mind that the next session will revive the attack with more system and earnestness—and it is surely not the interest of any body or any thing that a serious handle should be furnished.
On the whole, I am persuaded that the bank can do what I ask without real inconvenience to itself; and my situation is such that I shall be compelled to find an auxiliary.
All the cry here is for peace. How is it with you?
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