The Complete Loan Package of the United States Government, Seeking Funds in Paris to Save the War Effort; Sent by Ghent Negotiators John Quincy Adams and Albert Gallatin to the U.S. Ambassador in France, William H. Crawford

An extraordinary – and likely unique – set of documents, retained by Crawford and obtained by us directly from the Crawford descendants

The War of 1812 had been raging for two years. The U.S. government faced a very challenging financial situation, brought on by restricted trade and almost two decades of seizures of merchant ships at sea, and now by a war on its own soil. Revenues were down to about one half of what was required, and prospects were for a $50 million shortfall by the end of the year. It needed to take steps to raise money, and quickly. Without further funds, there was a real question as to whether the government would be able to pay to maintain the army and navy during wartime. Specie (hard money) payments were severely restricted, and many US banks could not or would not extend the credit. Moreover, merchants would accept Treasury bills only at a steep discount.

To meet this challenge, on March 24, 1814, Congress authorized the President to raise the money by borrowing up to $25 million. This prompted a lively public debate on the nation's capacity to sustain a debt of that size. So the government determined to do the borrow in tranches (portions), in the belief that advertising the loan in pieces would cause less controversy and perhaps make the government’s loan efforts more successful.  It was stated that the government loan for $6 million would be taken in Europe. Though many were skeptical of this, the skeptics proved wrong.

 In May of 1814, President Madison wrote his Treasury Secretary, “Should we find it necessary to resort to Europe for the next loan, there may be little time to spare in authorizing the negotiation. The loan we have obtained… cannot be calculated on to meet our demands beyond the month of August; or at the farthest, September. Hence it appears desirable to make some provision at an early day, if practicable, to guard against embarrassment in our Treasury-operations.” The Treasury Secretary’s annual report was dire: the effectiveness of the British blockade combined with weariness of lenders meant that less and less was being taken in, as more and more was spent.

On September 29, 1814, John Quincy Adams wrote in his journal: “[Boyd] left Washington the 12th of last month at twelve hours notice and sailed on the 16th from New York in the Transit, a fast sailing Baltimore schooner. He arrived at Bordeaux the 17th of this month at Paris the 23d and here this morning at six o clock having travelled from Paris day and night. His dispatches and newspapers are to the 12th of August. Those from the Treasury are in the first instance for Mr. Gallatin with powers to negotiate a loan in Holland of six millions of dollars. They are to me only in the case of Mr Gallatin's absence and to Mr Crawford in case the loan should not be obtainable at Amsterdam.”

On October 3, Gallatin wrote at length to the Willinks (bankers in Holland who with a track record of investing in the United States) seeking funds up to $6 million.  These were confidential communications so as not to alert others that the Americans were seeking such funding in Europe. Gallatin received a response from Willinks, explaining that they would be unable to lend the money on terms that were likely to be acceptable.  So the US government and Ghent negotiators turned to Crawford.

Autograph letter signed, by both Gallatin and Adams, Ghent, October 16, 1814. "We received your letter of 26th September, and wrote immediately by Mr. Boyd to our bankers at Amsterdam on the subject of the loan.  Their answer gives no hope of success at this time at that place; but as you will perceive it holds out some expectation that on the contingency of favorable circumstances, the object may be obtainable after the commencement of the ensuing year. We are of opinion that such enquiries should now be made at Paris, as may enable us to give the necessary information to our government by the next dispatch vessel; and we believe that if any considerable portion of the loan can be obtained by your operations, the residue will be raised at Amsterdam.  In what manner these enquiries should be made, without their object becoming public, you will be best able to judge.  It is probable that the two houses of Hottinger and of Delessert, who have both some property in America, may be safely entrusted with the object… We enclose copies of the powers and instructions from the Treasury…"

With the letter is the original complete loan package sent to Crawford to achieve the loan.

* The entire U.S. government loan package, sent with the above letter; most have notations in the hand of John Quincy Adams  

They include:

1) A manuscript copy of the authorization from the Secretary of Treasury, authorizing the obtaining of the loan, with amendments in the hand of Adams;

2) The document signed in clerical hand affixing the seal of Secretary of State James Monroe to the act of Congress, attesting to the authenticity of the Act, with an amendment in the hand of Adams;

3) An order of James Madison signed in clerical hand authorizing the Secretary of the Treasury, or his designates to obtain the loan;

4) A copy of the original Act of Congress, with amendments in the hand of Adams.  

The above are likely in the hand of the Ghent legation Secretary, Charles Hughes. The signatures are clerical except for the Adams amendations.

5) The letter from Gallatin and Adams to the bankers detailing their project for obtaining a loan and stating the terms they request.

The response from France was even less encouraging.  Crawford responded to Gallatin that he had “made sufficient enquiry to ascertain that no loan can be obtained in France upon terms which can be accepted.” Crawford feared that the capture of Washington would have a chilling effect on their mutual efforts.  Talleyrand himself had said “on holding a large amount of the funded debt of the US, he would not give one sou for the whole of it.”

On October 25, just days after this letter, Crawford wrote to Gallatin, “The inference is almost necessary that the US have not in the hands of their bankers funds sufficient to discharge the interest of the public payable in Europe…”, meaning the interest payment due on the US Louisiana debt.  

The next day, Gallatin reported to Monroe that a loan in Europe would not be obtainable before the first of the following year.  His candid assessment was much worse: it would not be forthcoming at all. Only the end of the war would save the country, which in the meantime would default on some of its debts.  And the Panic of 1819 was right around the corner.

There is no record of any other document signed by multiple negotiators, let alone on a topic of great importance, having reached the market before this. We obtained the group directly from a Crawford heir, and it has never before been offered for sale.