I cannot close my letter without some observations on the transfer of
our domestic debt to foreigners. This circumstance and the failure to
pay off Fiseaux' loan, were the sole causes of the stagnation of our
late loan. For otherwise, our credit would have stood on more hopeful
grounds than heretofore. There was a condition in the last loan, that
the lenders furnished one-third of the money, the remaining two-thirds
of the bonds should remain eighteen months unsold, and at their option
to take or not, and that in the meantime the same bankers should open
no other loan for us. These same lenders became purchasers of our
domestic debt, and they were disposed to avail themselves of the power
they had thus acquired over us as to our foreign demands, to make us
pay the domestic one. Should the present necessities have obliged you
to comply with their proposition for the present year, I should be of
opinion it ought to be the last instance. If the transfer of these
debts to Europe, meet with any encouragement from us, we can no more
borrow money here, let our necessities be what they will. For who will
give ninety-six per cent. for the foreign obligations of the same
nation, whose domestic ones can be bought at the same market for
fifty-five per cent.; the former, too, bearing an interest of only five
per cent., while the latter yields six. If any discouragements can be
honestly thrown on this transfer, it would seem advisable, in order to
keep the domestic debt at home. It would be a very effectual one, if,
instead of the title existing in our treasury books alone, it was made
to exist in loose papers, as our loan office debts do. The European
holder would then be obliged to risk the title paper of his capital, as
well as his interest, in the hands of his agents in America, whenever
the interest was to be demanded; whereas, at present, he trusts him
with the interest only. This single circumstance would put a total stop
to all future sales of domestic debt at this market. Whether this, or
any other obstruction, can or should be thrown in the way of these
operations, is not for me to decide; but I have thought the subject
worthy your consideration.
I have the honor to be, with sentiments of the most perfect esteem and
respect, Gentlemen, your most obedient, and most humble servant.