To George Washington from Alexander Hamilton, 27 August 1792
From Alexander Hamilton
Treasury Departmt Augt 27.1792.
Sir,
By the Act of the last Session entitled “An Act supplementary to the Act making provision for the Debt of the United States,” authority is given to discharge the debts due to foreign Officers out of the monies which the President is authorised to borrow by the Act making provision for the Debt of the United States.1
The sum authorised to be borrowed by the last mentioned Act is 12.000.000. of Dollars. The whole amount of the foreign debt, exclusive of that due to foreign Officers, was 11.710.378 Dollars & 62 cents. The difference is 289.621. Dollars & 38 cents, which is greater than the sum due to foreign Officers being about 230.000 Dollars. This debt being payable in Paris and bearing an interest of six per Cent, it is for the advantage of the United States to discharge it as soon as possible. The last loan will be a convenient fund for the purpose, and if approved by the President a part of it will be so applied.2
Should it appear to the President adviseable to direct this payment—a second question arises, namely whether it shall be made in Assignats, or in a mode which shall exempt the parties from the loss which would attend the depreciation of those securities—without however occasioning loss to the United States. The last appears best to accord with the justice & reputation of the Government.3 With the highest respect and the truest attachment I have the honor to be &c.
A: Hamilton
P.S. Your Letter of the 13. instant & the Contract concerning the N. Hampshire Lighthouse were duly received.4
LB, DLC:GW.
1. The supplementary act was approved on 8 May 1792 during the first session of the Second Congress (see 281–83). “An Act making provision for the [payment of the] Debt of the United States,” approved on 4 Aug. 1790, authorized the president to borrow “a sum or sums, not exceeding in the whole twelve million of dollars,” for payment of the foreign debt (ibid., 138–44).
2. When the Revolutionary War ended in 1783, the Continental Congress could not pay the salaries of the foreign officers who had served in the Continental army. A partial cash payment was made to them in 1782, and they received the rest of their arrears in certificates of indebtedness at 6 percent interest. Those certificates, which depreciated quickly, were exchanged for new ones issued on 5 April 1784, again bearing 6 percent interest but with no definite redemption date. GW approved Hamilton’s redemption plan in a letter to him of 31 Aug. 1792 and issued the ratification statement on 5 Nov. 1792. Monies for this redemption came from the Dutch loan contracted on 9 Aug. 1792 (see Contract, contemporary translation from the Dutch, DNA: RG 59, State Department Letters, Accounts, and Contracts Relating to European Loans). Although most of the certificates were redeemed by 1803, it was not until 1828 that all were exchanged (see 22–23, 28).
3. For GW’s opinion on repayment of the debt due foreign officers, see GW to Hamilton, 31 Aug. 1792.
4. In his letter to GW of 3 Aug., Hamilton enclosed the provisional contract for the supply of the lighthouse on New Castle Island at the mouth of the Piscataqua River in Portsmouth, N.H., which GW approved in his reply of 13 Aug. 1792.