Signer of the Declaration of Independence Francis Hopkinson Instructs Benjamin Franklin in Paris to Honor a Loan Taken By an American

Benjamin Franklin played a crucial role in winning the war from his seat at Passy in France.  He was dispatched, along with Silas Deane and Arthur Lee, in December of 1776, to get badly needed military and financial support.  He was welcomed with great enthusiasm, as numerous Frenchmen embarked for America to volunteer for the war effort. Motivated by the prospect of glory in battle or animated by the sincere ideals of liberty and republicanism, volunteers included the likes of Pierre Charles L’Enfant, and Lafayette, who enlisted in 1776. But Franklin’s most important contribution was in the financial realm.  In 1777 the American delegation obtained a 2,000,000 l.t. (livres tournois or Tournois pounds) loan from a group of French investors known as The Framers General. Other loans followed.  In a March 12, 1777 letter from Paris to Congress, the American Commissioners “advise Congress to draw on us for sums equal to the interest of what they have borrowed, as that interest comes due.” The implication is that Louis XVI had agreed to pay the interest on American war debt.  This was a substantial amount of money.  Congress had issued Loan Office certificates to pay for the functioning of government and for the maintenance of the war.  These IOUs paid varying rates of interest annually.  Now this interest would be paid by France.

This letter from France spawned the creation of Continental Loan Office Bills of Exchange.  The United States would repay domestic debt with Bills of Exchange to be drawn on American loans in France.  These would read “for interest due on Money borrowed by the United States.”   The money would be paid out under the direction of Benjamin Franklin and Ferdinand Grand, who was the American banker in Paris.  Many Americans did not like the terms of the Certificates and feared sending them abroad to people they had never met.  Securities traders like Haym Solomon would handle these transactions frequently, often buying them at steep discounts.  This led to the development of the trade around Continental Loan Office Bills of Exchange, which was the first regular securities market, developing in coffee houses in major cities.

Francis Hopkinson at the time was the Treasurer of loans and he had his people stationed in the colonies, such as Thomas Harwood, who was his commissioner in Maryland.   Thomas’s brother Benjamin was an investor in the American cause.  Benjamin Harwood was born on December 3, 1751, the ninth and last son of Capt. Richard and Ann (Watkins) Harwood. He resided on Northeast Street (now Maryland Avenue) in Annapolis, and was partner in his brother’s store on the Dock selling imported goods from 1773 to about 1788. During the Revolution Harwood served as first lieutenant of an independent militia company in Annapolis, commissioned on July 18, 1776 and February 15, 1777, and later as captain of that company, commissioned on October 6, 1777. He was also a commissioner of the loan office, appointed in 1777, and the Continental Receiver of Taxes in Maryland during the 1780s.

Document Signed, addressed to the Commissioner or Commissioners of the United States of AMerica at Paris, in this case Benjamin Franklin, signed by Signer of the Declaration Francis Hopkinson and his commissioner Thomas Harwood, September 28, 1781.  “At thirty days sight of this Fourth Bill, First, Second and Third not paid, pay to Benjamin Harwood or Order, Twelve Dollars, in Sixty Livres Tournois, for interest due on Money borrowed by the United States.”