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

TO N. AND J. VAN STAPHORST - Thomas Jefferson, The Works, vol. 4 (Notes on Virginia II, Correspondence 1782-1786) [1905]

Edition used:

The Works of Thomas Jefferson, Federal Edition (New York and London, G.P. Putnam’s Sons, 1904-5). Vol. 4.

Part of: The Works of Thomas Jefferson, 12 vols.

About Liberty Fund:

Liberty Fund, Inc. is a private, educational foundation established to encourage the study of the ideal of a society of free and responsible individuals.


TO N. AND J. VAN STAPHORST

Paris, Oct. 25. 1785.

Gentlemen,

—I received yesterday your favor of the 20th inst. In order to give you the information you desire on the subject of the Liquidated debts of the United States, & the comparative footing on which they stand, I must observe to you that the first & great division of our federal debt is into 1. Foreign and 2. Domestic. The Foreign debt comprehends 1. the loan from the government of Spain. 2. the loans from the government of France & from the Farmers general. 3. the loans negotiated in Holland by orders of Congress. This branch of our debt stands absolutely singular: no man in the United States having ever supposed that Congress or their legislatures can in any wise modify or alter it. They justly view the United States as the one party & the lenders as the other & that the consent of both would be requisite were any modification to be proposed. But with respect to the Domestic debt, they consider Congress as representing both the borrowers & lenders, and that the modifications which have taken place in this, have been necessary to do justice between the two parties, & that they flowed properly from Congress as their mutual umpire. The Domestic debt comprehends 1. the army debt; 2. the Loan office debt. 3. the liquidated debt. & 4. the unliquidated debt. The 1st. term includes debts to the officers & souldiers for pay, bounty & subsistence. The 2d. term means monies put into the loan-office of the United States. The 3d. comprehends all debts contracted by quartermasters, commissaries, & others duly authorized to procure supplies for the army, and which have been liquidated (that is, settled) by commissioners appointed under the resolution of Congress of June 12. 1780. or by the officer who made the contract. The 4th. comprehends the whole mass of debts described in the preceding article which have not yet been liquidated. These are in a course of liquidation, and are passing over daily into the 3d. class. The debts of this 3d. class, that is the liquidated debt is the object of your inquiry. No time is fixed for the payment of it, no fund is yet determined, nor any firm provision for the interest in the meantime. The consequence is that the certificates of these debts sell greatly below par. When I left America they could be bought for from 2/6 to 15/ in the pound: this difference proceeding from the circumstances of some states having provided for paying the interest on those due in their own state, which others had not. Hence, an opinion had arisen with some, & propositions had even been made in the legislatures for paying off the principal of these debts with what they had cost the holder & interest on that. This opinion is far from being general, & I think will not prevail. But it is among possible events. I have been thus particular that you might be able to judge not only in the present case, but also in others, should any attempts be made to speculate in your city on these papers. It is a business in which foreigners will be in great danger of being duped. It is a science which bids defiance to the powers of reason. To understand it, a man must not only be on the spot, and be perfectly possessed of all the circumstances relative to every species of these papers, but he must have that dexterity which the habit of buying & selling them alone gives. The brokers of these certificates are few in number, and any other person venturing to deal with them engages in a very unequal contest.