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to oliver wolcott - Alexander Hamilton, The Works of Alexander Hamilton, (Federal Edition), vol. 10 
The Works of Alexander Hamilton, ed. Henry Cabot Lodge (Federal Edition) (New York: G.P. Putnam’s Sons, 1904). In 12 vols. Vol. 10.
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to oliver wolcott
April 10, 1795.
I wrote you a few lines by the last post. I sit down to fulfil my promise then made.
The fulfilment of our foreign engagements under the existing circumstances is no doubt a perplexing task. But I hope it will not be found impracticable to effect enough to preserve character and credit.
Every thing must be done to this end, though with considerable sacrifices, provided you do not go so far as to endanger credit at home. This must at all events be kept sound, since a shock there will be fatal, while the extraordinary situation of the times will furnish an apology for any omissions which may happen abroad; and, by eventual indemnification, the wounds which may be given to foreign credit may be healed. The opinion which some entertain is altogether a false one—that it is more important to maintain our credit abroad than at home. The latter is far the most important nursery of resources, and, consequently, far the most important to be inviolably maintained. A failure here would be the more material, because it would argue want of means, and could not shelter itself under the plea of temporary embarrassments from external causes, and because it would derange our whole internal economy.
But, except the compromitting our whole domestic credit, nothing must be left undone to preserve external credit.
I do not doubt that the means which have been taken down to the first of June, inclusively, will be deemed adequate, considering the circumstances. They may, however, fail of the effect intended. But I do not apprehend any material evil from the delay of reimbursing the instalment of principal, if the interest is but punctually and honestly paid. I hope our commissioners, with the public and their own resources, will effect this, till further provision can be brought into action.
As to sending specie from this country, ’T is out of the question. ’T would derange every thing, and our commissioners ought to be frankly told that it is impracticable, owing to the interruption by the war of some of the usual channels through which we have derived our supplies of specie.
But commodities may be remitted on the public account, and this (the resource of stock failing) must, for aught I see, be done, unless what I shall now mention can be accomplished, with the judgment of our commissioners in its favor, to wit:
Let them enter into an arrangement with the constituted authorities of Holland or France (preferring the former) to receive at Amsterdam the sums necessary for paying those which we shall owe, giving drafts upon our treasury for equivalent sums. This will enable the French or Dutch government to obtain supplies here, which they will want.
But may they for this purpose receive and pay assignats? Not so, if assignats are not the general currency of the country; but if they are, there may be no choice. Gold and silver may not then be obtainable at all. Perhaps the commissioners may be able to raise funds by the sale of bills upon this country; otherwise, as many may wish, to remit from the Netherlands.
Yet our creditors must not be paid without a reasonable indemnification in depreciated paper. Consequently our commissioners must be authorized, if obliged to pay in assignats, to augment the rate, so as to allow an equivalent.
Accordingly, if the arrangement I have intimated can be effected, the commissioners may give bills, florin for florin, of gold or silver (or a dollar for 2 ½ florins); but if they are obliged to receive assignats, they ought to secure a premium of exchange equal to the depreciation.
This transaction ought to be managed under the superintendence of our minister.
What I wish you were able immediately to do is this: To ship without delay commodities sufficient, together with the moneys certainly in the command of the commissioners, independent of sales of stock, to pay interest to September, inclusively, writing them a letter suggesting the above plan, and authorizing them to act upon it if they approve.
The stock remitted may be ordered to be sold in England, which will furnish a fund upon which you can draw, in order to prosecute other methods of remittance.
At the same time, I think it may be well to take measures for ascertaining whether some arrangement could not be relied upon for remitting through England to Amsterdam. I know of no impediment, even now, to sending bullion (including Spanish and other foreign gold and silver coin) in American bottoms to Amsterdam, but impediments might arise. Perhaps in this case London might be made an intermediary of remittances to Holland, either by sales of stock or commodities there.
The commodities to be remitted ought to be such as to be liable to as little casualty as possible from war considerations, and they ought to be most effectually insured, and ought to appear authentically as those of the United States sent to pay their debts on their own account and risk. I suspect, however, the other plan will be found practicable on satisfactory principles, but no agreement ought to be for a longer term than a year.
If you are not able to send, immediately, commodities for payment of interest to September, it may then be of necessity to wait further information, giving full latitude, if it has not already been given, to sell stock for payment of interest at any price; suggesting the possibility of doing some thing through London, and proposing the plan of the arrangement which has been suggested. All the stock not salable in Amsterdam ought to be placed in London, under due precautions for security, to be sold there as a fund.
The co-operation of our minister in Holland will be proper throughout; and pretty large discretions must be confided.
If a very trusty and a clever fellow could go from hence, as agent for the treasury, with alternative instructions according to circumstances, it might be very useful. I believe William Smith, of South Carolina, would go and he would be safe and competent. Would not James Watson go? He would also do.
In contemplating a possible course of things, I had my eye upon the expedient of issuing warrants upon the treasurer, payable at future periods, from two to twelve months, in nature of exchequer bills. This may be a means of providing for the current service of credit, besides the expedient of loans from the bank. By being negotiable, they may answer the purpose of contractors, though articles may there by cost some thing more to the public, than on the plan of anticipated or prompt payment.
I mention this, because I foresee that, from the embarrassment of foreign events, there may be a press upon the treasury.
If any thing further occurs, you shall have it. Write me as freely as you please.
P. S.—There is one idea which may deserve attention—a depreciated paper naturally gives to gold and silver an artificial and exaggerated value. This may even occasion an undue loss to a debtor who is honorable enough to pay in gold and silver, when a depreciated paper is the general currency. This is more than just. But it may be policy in a government to submit to it. Yet there may be bounds. The idea may be brought into the view of our minister and commissioners for this purpose: To suggest, that if such an artificial advancement of gold and silver takes place, the compensation for depreciation may be adjusted upon some equitable ratio. But a moderate sacrifice, for simplicity of proceeding, may, in this case, be best.
I send a letter to the Attorney-General which you will read, seal, and deliver. You will easily divine my reason for addressing it to him. The President ought to view this matter as it is, but I do not write to him, because I do not wish to appear officious.
Have you taken any arrangement at Amsterdam, to facilitate the change of foreign and domestic debt, according to the law of last session? The moment is favorable. Facilities on the spot may promote the object. Our commissioners and our minister are worthy of trust.