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, and the comparative footing on which they stand, I must observe to you that the first and 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 and from the Farmers general. 3. The loans negotiated in Holland by order 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 and the lenders as the other and 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 and lenders, and that the modifications which have taken place in this, have been necessary to do justice between the two parties, and 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, and 4. the unliquidated debt. The 1st. term includes debts to the officers and souldiers for pay, bounty and subsistence. The 2d. term means monies put into the loan office of the United states. The 3d. comprehends all debts contracted by Quartermasters, Commissaries, and others duly authorised 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 enquiry. No time is fixed for the paiment of it, no fund as yet determined, nor any firm provision for the interest in the mean time. 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 circumstance 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, and propositions had even been made in the legislatures for paying off the principal of these debts with what they had cost the holder and interest on that. This opinion is far from being general, and I am of opinion 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 and 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.

I have the honor to be with the highest respect, Gentlemen Your most obedient humble servant,