CORRESPONDENCE.

Sir,

FROM THOMAS JEFFERSON TO JOHN JAY.

Paris, November 12, 1786.

In a letter which I had the honor of writing you on the 26th September, I informed you that a Dutch company were making propositions to the Minister of Finance here to purchase, at a discount, the debt due from the United States to this country. I have lately procured a copy of their memoir, which I now enclose. Should Congress think this subject worthy their attention, they have no time to lose, as the necessities of the Minister, which alone has made him to listen to this proposition, may force him to a speedy conclusion. The effect which a payment of the whole sum would have here would be very valuable. The only question is, whether we can borrow it in Holland, a question which cannot be resolved but in Holland. The trouble of the trial and expense of the transaction would be well repaid by the dispositions which would be excited in our favor in the King and his Ministers.

I have the honor to be, &c.,

TH: JEFFERSON.

Memorial of the Dutch Company.

Translation.

The United States have borrowed a large sum of money from France, for which they pay an interest until they reimburse it, at the rate of six per cent. per annum. It is not known to us whether the

3

periods of this reimbursement are fixed, or whether they are left to the convenience of the United States; the quota of this sum is also unknown. It is supposed that it cannot be less than twenty-four millions, and that the period of reimbursement is not near. It is thought that the two nations consider their mutual benefit, and upon this supposition an arrangement of the debt of the United States is proposed, which appears to suit the interest of both these Powers.

On the part of France, the want of money to facilitate its reimbursements and improvements should induce her to fix a certain price. for the actual return of so large a sum.

On the part of the United States, the scarcity of money which they experience, and the want of it which the natural extension of their situation occasions, must render every measure precious that will bring into circulation the sum they have borrowed, and under such a form that this circulation will take place as well in the United States as elsewhere.

This mode offers of itself. It consists in converting the American debt into bills, payable to the bearer, in sums from five hundred to a thousand French livres, and annexing dividends to these bills for receiving the interest in such places as shall be agreed and fixed upon. It is by no means to be doubted but that commerce and the Europeans who would settle in the United States would carry there great numbers of these bills, which would probably be reimbursed there. The United States would find two great advantages from this operation. The first, by acquiring in their circulation at home a paper which, by the full credit it would have, would answer all the purposes of cash. Secondly, being able to pay at home a part of the debt and the interest, and to reduce it by degrees, by means of the purchase of lands with these bills, payable to the bearer; for the speculators in land could pay for them in this way with advantage, both on account of their being able to procure these bills in Europe on better terms than specie, and that it would particularly suit the United States to encourage the exchange of uncultivated lands which they have to sell, for bills which they must reimburse, and which, in the meantime, costs them an annual interest.

These instances will prove the great benefit which France would procure for the United States, by converting the credit she has given them into bills payable to the bearer, which might be brought into circulation.

With respect to the benefit France would reap, it is very probable that she might dispose of all these bills at once to a company who would take them up in consideration of some sacrifice and facilities, which are customary in transactions of such magnitude. It must be observed here that this arrangement is determined upon the presumption, as far as the nature of the case will admit, that this debt is recoverable.

It will, therefore, follow that France will obtain for the purposes of Government a speedy return of a sum of money which will proportionably lessen the loans which may be otherwise necessary.

On the first reflection, it might appear that France ought not to sell her debt with the United States, especially on terms favorable to the purchasers, but on conditions of not being obliged to guaranty the same against accidents, which may render it doubtful, as this might occasion a distrust against the credit of the United States, which might be prejudicial to them, and which would be impolitic on the part of France, and inconsistent with the reciprocal friendship between her and the United States. This objection will be removed by France continuing to be guarantee for the payment of the bills with interest. This guarantee, therefore, is not only necessary for the success of the proposed arrangement, but the dignity of France also requires it; less hazard will attend this than the risk that attended the losing the sum lent to aid a revolution which she judged important; the solvency of the United States depending upon their independence, France ought not to expect any premium for guarantying a solvency, the basis of which it is her interest to support. Should the removal of this objection be opposed, by observing that the speedy benefit of twenty millions is not of sufficient consideration to determine France to make a change, when she should not thereby free herself at least from risk with the United States, we answer that the advantage of restoring these twenty millions into circulation, and thereby preventing the borrowing of this sum, is not the only one.

The United States are not yet free from all apprehensions of danger. There appears some difficulties between them and England with regard to fulfilling the treaty of peace. The policy, as well as the inclinations of the United States, require their firmness in every thing they have to transact with that Power. They may, therefore, be under the necessity of demanding further pecuniary aids. The

circumstances that may render these necessary may likewise render it difficult to obtain, especially should they defer asking them until these circumstances are made public. This arrangement then may facilitate their aid. Should it require promptness, and should it be impolitic or too hazardous to seek it elsewhere than in France, she may then grant it, without being obliged to increase her taxes by means of the actual product of her debt. If this consideration has any weight, it follows that the proposed arrangement should be delayed as short a time as possible. The English funds fall, and which can only be attributed to the apprehension that a dangerous contest may be occasioned by the refusal of the Court of London to evacuate the forts.

The proposed arrangement requiring his Majesty's arrêt, the following is a sketch of one if offered.

Sketch of an arrêt. Louis, &c.

Upon representations made to us that the sums we have lent to the United States, our dear allies, will not be returned until a distant period, and that by turning our debts into negotiable notes they will enter immediately into circulation, and would afford the said States an advantageous opportunity of discharging the same, both by means of removing the necessity of remitting to Europe the necessary funds for the payment of the interest and capital of part of their debt represented by the bills which their circulation shall have brought among them, as also by the opportunities that this circulation may offer of exchanging lands for these bills, which will thereby give a new spring to the cultivation which the United States desire to extend and accelerate, and upon being assured that such an operation would really produce those advantages to the United States, without the least inconveniency which suggested the measure, especially by guarantying the payment of said bills to the possessors. We have, therefore, &c., &c.

Another preamble. Louis, &c.

Ever considering what may be advantageous to the United States, and facilitate to them the means of extricating themselves from a debt which they have been obliged to contract, as well with us as with other Powers, and particularly their liberation from the loan of the year, the period of reimbursement being near at hand, have conceived that it will be a fresh proof of our good will by giving a form to this loan, which will bring it into circulation by making it

negotiable. It appears to us that by converting this sum of into bills, payable to the bearer, to the amount of livres each,

with term of interest, payable at fixed places, we should furnish the United States with a simple mode of reimbursing successively within themselves, and without any distress, the bills which will be thrown into commerce. In operating this conversion, we have thought it incumbent on our justice, the dignity of our crown, and our affection for our dear allies, to guaranty the security and the payment of these bills with their interest. This guarantee will, moreover, afford a fresh proof of the value we fix on preserving our alliance with the United States. We have been the more inclined to adopt this advantageous method for the United States, as it is perfectly reconcileable with the interests of our subjects, with the circumstances and disposition we are in to free our State by degrees of all its debts and charges. For these reasons, &c., &c.

The articles of the arrêt will have in view:

1st. To create bills payable to the bearer to the amount of the sum lent to the United States in the year -, the fixed period of whose reimbursement falls in

number

and amounting to

which bills shall each be of numbers, from number one to

-, agreeable to the model annexed to the arrêt. 2d. To fix the period of reimbursement, and the number of bills which shall be reimbursed at each period. This must be determined by lot. The reimbursements to be made in Paris, Amsterdam, Philadelphia, Boston, New York, Charleston, with bankers, who shall be appointed.

3d. The number of bills which, by lot to be reimbursed, shall be published four months before the reimbursement, by means of the public prints most generally known in Europe and America.

4th. To determine where the lots shall be drawn. This would appear to be most proper in one of the cities of the United States. 5th. Until the reimbursements the bills shall draw an annual interest of six per cent., which shall be paid every year, commencing from in the cities marked out in the article, and by the bankers to be appointed. This payment shall have effect on presentation of the original bill, to which shall be annexed the dividends of interest, agreeable to the model, &c.

6th. The reimbursed bills shall be withdrawn as being extinguished, as also the interest not due. The bankers who shall have paid them