National gazette. — Philadelphia [Pa.], 1793-03-02 00:00:00, page 1

Report of the Secretary of the Treasury, re
lative to the Loans negotiated wider tht
Aits of the c,th and \2th of Augjft, 1790.
[Continued from our lajl.~\
TF there be any want of legality in the
pla i which has been pursued, I was
not at the time, and ain not yet sensible
of it.
I know of 110 rule which renders it ille
gal in an agent, having from the fame
principal two authorities to borrow mo
nty,whether for one or different purposes,
to unite the loans he may make, upon the
foundation of both authorities : Provided
the terms of them be consonant with both
or either of his commiflions. If the pur
poses are different, it will be incumbent
upon him, to take care that the application
of the monies borrowed makes the pro
per separation ; and doing this he will
have fulfilled his trust. Toteft this por
tion it Teems only neceflary to alk, whe
ther the principal in such cafe would not
be fully bound to the lenders ?
In reflecting originally upon the regula
rity of the proceeding meditated, there
was but one source of hesitation ; th? dif
ferencein the funds upon which the loans
were to rcil Butthe following reason
ing fatisfird the scruple : The pledging ol
particular funds is for the security of the
lenders. It they are willing to wave the
special security, by lending on the genera
credit of the government, or to dispense
with the preference of one fund to another
where two are pledged, by lending indif
criminatelv on the credit of both, the one
or the other circumstance mtiftbe alike
indifferent to the government. The au
thority will have been well executed, tc
the extent necefTary for public purposes.
and if any thing remains unexecuted, it
will be in enlargement, not in abridgment
of .he public rights.lt is however prelumec
t tat th? prn&icsi cwnftrucHtjn, in the pre
fjnt cafe will be, that the two funds pledg
ed will constitute an aggregate, for tin
joint security of the monies borrowed up
on both aits.
The second general circumstance ref
pefling the foreign loans, negotiated un
der the a£ts of the 4th , and 12 th of Anguft,
which requires attention, relates to the
terms 0.1 which they have been obtained.
These.it appears have been represented.as
neither honorable nor advantageous.
The following facts, witnefled by the
correlpondcnce bei'ore the Senate, more
than once referred to, and well known to
all who have had opportunities of infor
mation, demonstrate, that the terms of
those loans, have been both honorable and
advantageous.
1. There is not one of them, which ori
ginated under the arts, that was not effec
ted upon condi ions equally favourable
•with those attending the loans of the co
temporary borrowing powers of the molt
tried resources and bell established credit,
and more favorable than w ere obtainable
by some powers of great refpeOability
2. The United States took a lead in the
market, in regard to the subsequent re
du£>ions of interest ; having had either
earlier or more complete success than ar.y
other borrowing power.
3. From a rate of five per cent, interest,
and four and a half per cent, charges,
which marked ths level of the market
when they begun their loans, they In the
course of a single year, brought down the
terms to four per cent, interest, and five
per ccnt, charges ; th.;t is from an interest
on the nett sum received (including an in
demnification for charges) of 5.5012,
something more than five and a half per
cent, to an interest on the like sum of
4.4951, something lefsthan4 [-2 per cent.
When this state of things is applied to a
government, only in the third year of its
cxifter.ce, and to a country which had so
recently emerged from a total derange
ment ofits finances, it would i'eem innpof
fible to deny that the ifi'ue is not only 110-
3iorable, but flattering , unless indeed it
can be denied, that a found and vigorous
state of credit is honorable to a nation.
I forbear a comparison between the
loans of the present, and ot the former
government of this country, because an
immense disparity of circumstances would
render it an improper one—further than
to take Eotice of a very great error which
has been upon some occasions advanced.
It has been alledged, to disparage the
management, under the present, that the
loans of the former government, in a situ
ation comparath e'v very disadvantageous,
Numb. 36 of Vol. ll.]
By P. FRENEAU: Publifhcd Wednesdays and Saturdays, at Three Dollars per annum.
have be - i effected upon equal terms ; and
in proof of this an appeal has been made
to the io.ni of 2,000,0d0 of guilders at
four per cent, which is that of the gth of
March, 1784.
Nothing can manifeft more clearly th in
this, the very precipitate and fuperficial
views, with which fu on impor
tant public fubjeits, are sometimes made.
Thelaft four per cent, loan, obtained
under the existing laws, including char
ges, is a real four and ahalf par cent loan
ur more exaftly'a 4.4951 per cent. loan. The
four per cent. loan of March i"B4, is a
i real 6.C4fiS per cent. loan. The diifer
?nce which exceeds 2 per cent, arises
irincipally from extra premiums and gra
'fications which were allowed upon this
oan, and which are unknown to the o
:her.
Much praifeis no doubt due to the ex
rtions which effected the loans under
:he former government. A fnperiority of
lierit, (hall readily be conceded to them,
Vom the circumstances under which they
.vere made, and their lignal utility in the
evolution. But it is not nerefTary to
heir eulogium to affirm, that they were
nade upon equal terms with those lately
ibtained. or to deny the gopdnefs of the
erms of the latter. Truth will not jufti
'y the one or the other.
The facts which nave been stated prove,
hat the terms of the loans are advanta
geous as well as honorable. They are
romparatively advantageous, becanfe the\
ire as moderate as other powers in the
>eft credit have allowed ; and tliey are
ibfolutely achantageous, because the high
lit real not tiotnirial rate of interest,
vhich has been given does not exceed
a fraction more than 51-2 per
:etit. while the lo weft real rale is 4-495'
1 fraction leO than 4 1-2 per cent. >
If the question whether advantageous
>.* ni>t be te(t«d *>y the pr«rpofV*s for which
Jj loans have been made, the conclusion
equally in their favour—The payments
>n ac of the foreign debt, were .111
ildifpenfabie obligation. Unless it can be
hewn that they might have been derived
Vom another and more advantageous
oiirce, it will follow that it was the in
ereft of the government to avail itfelf of
he resource which has been employed,
iccaufe it was its duty todifcharge its ob
igai'ons.
It is sometimes urged, that foreign
oans for whatever purpose are pernicious,
lecaufe they serve to drain the country
if its specie for the payment of interest,
ind for the final re mburfement of princi
lal—?hat it would be preferable for that
eafon to procure loans at home, even at
i higher rate of interest.
To this, feveial answers may be given,
"ome of afpecial, others of a general na
:ure.
In reference to the reimbursement of
:he foreign debt, it may be observed, that
is a debt had already been incuried abroad
ipon which .ntereft was payable, the con
trailing of new loan? there for the reim
burfement of that debt, would leave u>,
is to the denial,d for the exportation of
jur specie, just where we originally stood.
Moreover if the money could have been
jorrowed at home, for that re'nnburfe
nent, the remittance of it would hav.
leen ruinous to the country. The mere
leceffity of remitting could not alone
lave mere-fed the foreign demand fur
jur commodities ; so as to deduce from
in extra exportation of them, the reqni
ite means of pavment ; and if our specie
ivas to perform the office, the countiy
would speedily have been exhaijfted to a
fegi ee irconfiftent with the fapport of it
:o_mmerceand iiuluftry. The quantity of
:oin in the United States has never been
ronfiderable enough for such ail opera
ndi.
But this very ftaie of things would
have rendered the procuring of the 1110-
ley from domestic resources impracticable.
Thtfe it may be fafely affirmed are too
limited for extensive loans, of any confi
ilerable degree of permanency.
In the last place—The expedient of do
mestic loans, would not oreveni the evil,
which is delired to be prevented. Fo
reigners would either in the firft instance,
bring their monies to (übferibe them to
the loan-, or, they would afterwards pur
chase the Hock arising from them ; and in
either cafe they would equally draw away
the money of the countryon account oftl.eir
interest and principal. The only confe-
of giving a difpropoi donate rate of
S A T U R D A Y, March 2, 1795.
interest for domestic loins would be. that
our specie would be carried, away so much
the fafter.
Experience having (hewn, that nations
fometiines pay more regard to their ex
ternal than to their internal credit, this
confi4eration co-operates with reasons of
convenience to induce monied men abroad,
to be coment with a lower rate of inte
rest, stipulated to be paid in their own
country, than if the place of payment be
in another country ; making even a great
er difference, than is an equivalent for the
expence and risk of obtaining remittan
ces.
Th : clear inference from these obferva
lions, is that with regard to the reimburfe
tnent of the foreign debt, no other expe
dient than that of foreign loans was prac
ticable or eligible.
Th? utility of that part of the loans,
which has reference to the purchase oi
the debt, has already been explained ir
:ertain Views. So far as their agency ha:
jeen hitherto concerned in that operation,
it is a fnlficient demoaftratio'.i of the advan
tage of the measure toftate, that the sum
inverted in purchases up to the period
as the !afl report to Congress has redeem
ed what is equal to an annuity of 6.15
per cent, including also the advantage of
inking a capital more than 50 per cent.
;reatcT than the sum expended.
A valuable profit will arise from the in
feftment of the funis on hand, either in a
jayniei.t to the bank or in the purchase
jfftoefc. The liberation of an annuity of
ix percpnt. can be secured —while upon a
;reat part of tliefund which is to effetl it
10 more than 4 1-2 per cent, is payable,
ind lefi than 51-2 upon the other part.
The mean of these rates beiqg 5 per cent,
in annual favipg of one per cent- may be
?ftetled, which upon 2,000,000 of dollars,
ntereft at 5 per cent, is equal to a capi
tal or gross sum of 400,000 dollars : an
tem certainly of no inconsiderable confe
rence.
Against the advantages, which are
tlaimed in favour of the loans, it is natu
ral to place the loss of interest incident to
:he delays, which have attended their ap
plication to the purposes, for which they
were obtained. This leads to an exami
lation of the cases of delay,their causes.the
:ircumftances if any, which counterba
lance them.
There are three instances of material de
—one refpeoVuig the firrt loan, another
the fecund loan, and a third, a part of the
two last loans.
The firft loan, it will be fern, was npt
applied till a coniiderable time after its
commencement. It has been already in
timated that it was undertaken without
previous authority from l;his country —
t"he motives to the meafu.i e are detailed in
a letter from our bankers of the 2jth of
January, i79Q,acopyof which accompa
nies the communications herewith made
by order of the Prefirfent. A regard to
'hofem tivesled to an acceptance of the
ioan. Nor could it have been denned an
unfortunate circumstance, that fucli an
auxiliary to the operations of the treasury
had beenprevioufly p.epared.
The laws authorizing the'loans, passed
the 4th and 12th of August. As early as
the 28th of that month, the acceptance a
bove mentioned was communicated, and
the application of 1,500.000 florins, in a
payment to France directed. So far no
:1 me was loft, more than could not have
seen avoided.
But the bills for the sum to be brought
iiere were not drawn till some months af
ter. This proceeded from an unwilling
ness to risk the public credit, by drawing
before there was a certainty of funds to
answer the drafts. It was not impossible,
that the great delay which had attended
the parting of the law for borrowing, might
have led the bankers to come to some ar
rangement with the money lenders, for
surrendering the monies paid in, and ter
minating the loan. Independent of this
source of apprehension, they had expressed
themselves, in their letter communicating
the step they had taken, to this effeiV —
•' To i'pare the United States all poflible
advance of interest, while the money shall
remain unappropriated, we fliall issue the
recipilTes at the option of the buyers t<
take them Jo late as they please, on the
expectation the three millions would be
placed in a few-months." This, though
it announced an expectation that the mo
nies would be paid in, in a few months,
did not render the event certain. And as
the bankers appeared from that precauti
on, to have adverted to the idea of saving
the United States an advance of interell,
it was ftippofieable t.bat they might have
found means still further to procrastinate
the payments, or a considerable part of
them, rill they had received a confirmati
on of the loan. This policy \yould have
been the more natural, as they risked the
loss of interell themselves, if the transac
tion fliould not have been finally ratified.
Under such circumflances I thought it
most prudent to defer the drafts, 'till ad
vice was received of the a&ual progress of
the loans. There was no room to hesitate
between the loss of a small fuiTi in intereil,
and the danger of committing the public
credit by a premature operation.
(To be continued.)
For the National Gazkute,
To JONATHAN JUSTICE, alias, C -
DEFAMER.* ' '
r\NE evening this week I fell in acciden-
tally with several of my old friends
«nd acquaintances. The National Ga
zette lying on the table, one of the com
pany took it up, and alked the others, if
:hey knew David Jqnes ?—The great' 4
:r part said, they knew'him well; and <>n
jfficerof thePennfylvania line asserted that
le had served with him all the war, that
le was no coward, but that a coward in a;i
inmauly manner had abused him; and
she knew the person, he would bellow
ipon him due & wholesome chaltifement,
as a reward for his libel.
AllEGitaus said he had been well ac
quainted with Jonathan more than 20 years
rod if he had for once acted like an honefl
nan, in appending his real name to his pub
lications, every person acquainted with
aim would have known his reaforis, and
ivou'.d have heartily drfpifrd him.
enlarged on the fubjeft, very little t<? tbe
llonor of Jonathan, and said he was always
making mistakes in his writings, such us
lating a letter at Fort Pitt, which
written in Philadelphia, and now he
tvoold make the world think he lived in
Shelter county, when In fail he resides in
New-Jersey, where he has a farm, obtain
ed bythe magic of continental money.—
But previous to this, he was one of those
nonorable citizens in Philadelphia, knows
jy the qame of bankrupt.
One of the company, named Ohianus,
aeggedto be informed by the others, if
:hey knew why Jonathan was provoked
with Mr. Jones's publications, feeing not
but meafur.es, were his object, and
:hat, like an honest man, hp signed hii
[lame to his writings ?
I know very well (replied Alleginius)
Jonathan's reason for being angry with
Vlr. Jones, as well as with governor St.
Clair. The reasons (continued he) are
partly the fame, viz. neither of them
ellablilhed Indian J overeig'.ty, which is a
capital object vith Jonathan- He then
proceeded to inform the company that
Jonathan and his friends had many Indian
ieeds, which if he could once establish,
Jonathan and those friends votild be aIL
nabobs. But poor Jonathan was an un
fortunate man. and notwithllanding his
jefiiitical cunning, things always termina
ted contrary to his willies, which had al
most ruined his temper. Alleginius went
un with his ftory,and inforpied the com
pany, that Jonathan had applied to Eng
land to have his deeds recognized, but that
th.e war came on. and, unhappily for Jona
than, terminated to the disadvantage of
old England ; that then Jnnathan&his ac
complices applied to Congrefs.butCongref*
could not, for their fouls, fee into the juf-'
tice of his Indian deeds, and they obffinate
ly refufed t® acknowledge the sovereign
ty of the t/rai<e Aborigines of America.
How blind nm{J Congress be !—Jona
than is a man of perseverance : he more
than once made his experiments on the
legislature of Virginia ; but they were as
obllinate as pongrefs, laughed hearti
ly at Jonathan's vanity.
Now (said Alleginius) when you conli
der Jonathan's situation, you 111-y discern
the reason why his malice propenfe "flames
out against all who do riot favoilr his
schemes.—Jonathan is a man of fciiemes ;
hence, if one fails he pursues another.
But hitherto he has been very unfortunate.
More than three years ago, Jonathan un
dertook a crusade, down the Ohio, to the
* See Nc.tiur.alGczettg, of February c,
[Total No. 14.0.]