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

TO ALEXANDER HAMILTON, SECRETARY OF THE TREASURY. - George Washington, The Writings of George Washington, vol. XII (1790-1794) [1891]

Edition used:

The Writings of George Washington, collected and edited by Worthington Chauncey Ford (New York and London: G. P. Putnam’s Sons, 1890). Vol. XII (1790-1794).

Part of: The Writings of George Washington, 14 vols.

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TO ALEXANDER HAMILTON, SECRETARY OF THE TREASURY.

Philadelphia, 20 June, 1793.

Sir,

I have received and paid attention to your report of the 15th instant. The result is, that the loan of two millions of florins ought, in my opinion, to be urged without delay, if it can be obtained within the limitations of the law. The further proposal of borrowing three millions of florins in addition, I shall, (seeing no inconvenience that will arise from the delay,) take a few days longer to consider; as some reasons occur against as well as for the measure, in the present unsettled state of credit, and military and other operations in Europe.1

In the mean time it would contribute to my understanding of the subject better, if you was to let me know how the whole sum borrowed under the acts of the 4th and 12th of August, 1790, (instead of the sums which have been transferred to the United States,) has been applied; and whether the two hundred thousand dollars, “first instalment to the Bank of the United States,” is a legal charge, under those acts or any other, in the account A. referred to in the report; also, whether the two hundred and eighty-four thousand nine hundred and one dollars and eighty-nine cents, expended in the purchase of the public debt, does not appear in the report of the commissioners of the sinking fund, or some other report made to Congress last session, as appertaining more properly to the surplus revenue.

I ask these questions for information; because, if the answer should be in the affirmative, the difference will be very material, and, when added to the balance of five hundred and sixty-five thousand four hundred and eighty-four dollars and twenty-eight cents, as per your statement A, would, with the two millions of florins negotiating, cover all the ascertained demands upon the United States for the years 1793 and 1794, exclusive of what may be required for the sinking fund; for which you have made no specific appropriation whereby to form an estimate of the aggregate sum required. I am, &c.1

[1 ]On June 3d Hamilton wrote to the President: “The failure of the late enterprise against the United Netherlands may be expected to have made a favorable alteration in regard to the prospects of obtaining loans there for the United States. Such an expectation is also countenanced by a late letter from our bankers at Amsterdam, which however as yet gives no certainty that can be a basis of operation.

“The existing instructions from this department to Mr. Short do not extend beyond two millions of florins. A comprehensive view of the affairs of the United States in various relations appears to me to recommend a still further loan, if obtainable. Yet I do not think it advisable to take the step, by virtue of the general powers from you, without your special approbation; particularly as there is little probability, that the loan can be effected on better terms than five per cent interest and four per cent charges. The further loan which I should contemplate would embrace three millions of florins.”

Before committing himself Washington asked for a report on the following points: 1. Whether all the moneys borrowed under the acts of the 4th and 12th of August, 1790, had been expended on their respective objects. If not, what was the balance under each date? 2. Under which of the two laws the Secretary proposed to open the new loan? and 3. To what use the money of the new loan was to be applied? Hamilton answered in a report, which the President submitted to Jefferson, asking his views on the propriety of the suggestion, and further wrote:

“The answers contained in the report show the points on which I required information from him. In addition to the motives assigned in the report for borrowing the additional sum, there are others (if the act of doing it is warranted by law) very cogent in my mind, as inducements to the measure, namely, the uncertain result of the Indian treaty, the invasion of our southern frontiers, and the peculiarly delicate situation in which we are placed with respect to some of the European powers, who, in spite of all we can do, may involve us in a dispute with one or other of them; in wch. case it might be too late for us to effect a loan in Europe.”—Washington to Jefferson, 16 June, 1793.

Jefferson had already given his opinion that a loan would be unnecessary (Opinion, 5 June, 1793) and in his reply of June 17th admitted that a loan of one million florins might be expedient. He gave more reasons against than for it.—Works, vii., 629, 633.

[1 ]Mr. Hamilton had at this time resolved to resign his place as Secretary of the Treasury.

“Considerations relative both to the public interest and to my own delicacy, have brought me, after mature reflection, to a resolution to resign the office I hold, towards the close of the ensuing session of Congress. I postpone the final act to that period, because some propositions remain to be submitted by me to Congress, which are necessary to the full development of my plan, and, as I suppose, of some consequence to my reputation; and because, in the second place, I am desirous of giving an opportunity, while I shall be still in office, to the revival and more deliberate prosecution of the inquiry into my conduct, which was instituted during the last session.

“I think it proper to communicate my determination thus early, among other reasons, because it will afford full time to investigate and weigh all the considerations, which ought to guide the appointment of my successor.”—Hamilton to Washington, 21 June, 1793.