TO JAMES MADISON.

Paris, May 3,1788.

Dear Sir,

Mine of February the 6th acknowledged the receipt of yours of December the 9th and 20th; since that, those of February the 19th and 20th have come to hand.  The present will be delivered you by Mr. Warville, whom you will find truly estimable, and a great enthusiast for liberty.  His writings will have shown you this.

For public news, I must refer you to my letters to Mr. Jay.  Those I wrote to him from Amsterdam will have informed you of my journey thither.  While there, I endeavored to get, as well as I could, into the state of national credit there; for though I am an enemy to the using our credit but under absolute necessity, yet the possessing a good credit I consider as indispensable, in the present system of carrying on war.  The existence of a nation having no credit, is always precarious.  The credit of England is the best.  Their paper sells at par on the exchange of Amsterdam, the moment any of it is offered, and they can command there any sum they please.  The reason is, that they never borrow, without establishing taxes for the payment of the interest, and they never yet failed one day in that payment.  The Emperor and Empress have good credit enough.  They use it little and have been ever punctual.  This country cannot borrow at all there; for though they always pay their interest within the year, yet it is often some months behind.  It is difficult to assign to our credit its exact station in this scale.  They consider us as the most certain nation on earth for the principal; but they see that we borrow of themselves to pay the interest, so that this is only a conversion of their interest into principal.  Our paper, for this reason, sells for from four to eight per cent, below par, on the exchange, and our loans are negotiated with the Patriots only.  But the whole body of money-dealers, Patriot and Stadtholderian, look forward to our new government with a great degree of partiality and interest.  They are disposed to have much confidence in it, and it was the prospect of its establishment, which enabled us to set the loan of last year into motion again.  They will attend steadfastly to its first money operations.  If these are injudiciously begun, correction, whenever they shall be corrected, will come too late.  Our borrowings will always be difficult and disadvantageous.  If they begin well, our credit will immediately take the first station.  Equal provision for the interest, adding to it a certain prospect for the principal, will give us a preference to all nations, the English not excepted.  The first act of the new government should be some operation, whereby they may assume to themselves this station.  Their European debts form a proper subject for this.  Digest the whole, public and private, Dutch, French, and Spanish, into a table, showing the sum of interest due every year, and the portions of principal payable the same year.