Alexander Hamilton’s Report on the American Debt to France
The Secretary of the Treasury to whom was referred a Communication from the Minister Plenipotentiary of the Republic of France, on the subject of the Debts of the United States to France, respectfully makes thereupon the following Report.
The object of this communication is to engage the United States to enter into an arrangement for discharging the residue of the debt which they owe to France; by an anticipated payment of the Installments not yet due, either in specie or bank bills of equal currency with specie, or in Government Bonds, bearing interest and payable at certain specified periods; upon condition that the sum advanced shall be invested in productions of the United States, for the supply of the French Dominions.
With regard to the first expedient, namely a payment in Specie or bank bills, the resources of the Treasury of the United States do not admit of its being adopted. The Government has relied for the means of reimbursing its foreign debt on new Loans to be made abroad. The late events in Europe have thrown a temporary obsticle in the way of these loans; producing consequently an inability to make payment, by anticipation, of the residue of the debt hereafter to grow due.
With regard to the second expedient, that of Government Bonds payable at certain specified periods; this in substance, though in other forms, has repeatedly come under consideration, and has as often been declined as inelegible. Great inconveniencies to the credit of the Government, tending to derange its general operations of finance have been, and must continue to be perceived, in every plan, which is calculated to throw suddenly upon the market a large additional sum of its bonds. The present state of things, for obvious reasons, would serve to augment the evil of such a circumstance; while the existing and possible exigencies of the United States admonish them to be particularly cautious, at this juncture, of any measure, which may tend to hazard or impair their Credit.
These considerations greatly outweigh the advantage which is suggested as an inducement to the measure (the condition respecting which is the principal circumstance of difference between the present and former propositions)—to arise from an investment of the sum to be advanced in the products of the Country; an Advantage on which perhaps little stress can be laid, in the present and probable state of foreign demand for these products.
The motives which dissuade from the adoption of the proposed measure, may, it is conceived, be the more readily yielded to, from the probability that the utility of it to France might not, on experiment, prove an equivalent for the sacrifices which she might have to make in the disposition of the bonds.
All which is humbly submitted
(Signed) Alexander Hamilton
Secy of the Treasy
June 8th: 1793
Tr (DLC); in Tobias Lear’s hand; at foot of text: “A True Copy—Tobias Lear Secretary to the President of the United States.” Tr (AMAE: CPEU, Supplément, xx); in the hand of George Taylor, Jr. Tr (NNC: Gouverneur Morris Papers). Tr (DNA: RG 46, Senate Records, 3d Cong., 1st sess.). PrC (PRO: FO 97/1). Tr (Lb in DLC: Washington Papers). Tr (Lb in DNA: RG 59, DL). Tr (AMAE: CPEU, xxxvii, in French). Tr (DLC: Genet Papers); in French; draft translation of preceding Tr. Printed in Message, 34–5.
Enclosed in George Washington to TJ, 10 June 1793: “The President sends to the Secretary of State the enclosed copy of a Report made by the Secretary of the Treasury to him—relative to the Debts of the United States to France, in order that it may be communicated to the Minister of the Republic of France” (RC in DLC; in the hand of Tobias Lear; address almost entirely torn away; endorsed by TJ as received 10 June 1793); also enclosed in TJ to Edmond Charles Genet, 11 June 1793, TJ to Gouverneur Morris, 13 June and 16 Aug. 1793, and TJ to Thomas Pinckney, 14 June 1793. Hamilton had enclosed this final state of his report in a letter to Washington of 8 June 1793 stating that it had been “altered in conformity to your desire” (Syrett, Hamilton, xiv, 523).