January 13, 1788 – February 12, 1788
I really want to talk more about socks, but that would be ignoring about 98% of the contents of these five letters, which happen to be about foreign debt. I invite you to discuss what you are about to read with your neighbor investment banker or community college economics professor, because merely coming up with those two characters has exceeded my comprehension of how money works. Let’s begin with the main players and what they’re up to at the moment:
- Thomas Jefferson: Trying to negotiate payment of U.S. debt to Dutch bankers and asking John Adams for advice
- John Adams: Trying to appear helpful, “but really, Jefferson, not my problem anymore”
- Fizeaux & Co.: Dutch creditor who wants to get paid
- Willinck and Van Staphorst: Dutch creditors who want to get paid
- Stanitski: Dutch creditor who wants to get paid
This time, I’ll skip the 18th century language and attempt to paraphrase the conversation.
TJ to JA:
FC wants his money now. W&V have agreed to pay off the interest we owe to FC to get him off our backs.* FC says no dice, pay up. We also have no money to pay off any of the W&V loan, and W&V inform me that they can only pay FC the interest up to June anyway, and after that we better cough up some more dough, otherwise we can kiss any future loans goodbye. They don’t seem to get it that there isn’t much we can do until our shiny new government actually gets rolling and can issue some cash. However, Stanitski says he can do us a solid. If we pay him one year’s interest on the debt we owe him, he’ll cover our debt with the other guys, and we’re good till June ’89. Just one catch: ten percent of that payment must be paid here in Europe, instead of in America.** Now, this is really up to our Treasury, but if I don’t hear anything in time, I’m gonna have to make a decision. What should I do? Accept Stanitski’s deal or default on our loans?
JA to TJ:
You can tell those avaricious Dutch bastards to go to hell. I’m out. Have fun.
Historical spoiler alert: Eventually the Dutch get paid, especially when the new U.S. government gets rolling and Secretary of the Treasury Alexander Hamilton comes on the scene in 1789 and starts taking names. But look, according to THIS MAP, we still owe Holland! Granted, they may no longer be our biggest concern…
*I’m no Dave Ramsey, but isn’t it a bad, bad, bad idea to be using one credit card to pay the interest on another credit card?
**I won’t pretend to understand the implications of this, but it has to do with W&V and others buying up a bunch of American currency and wanting to spend it in Europe. Check with your neighbor.