RC and enclosures (Adams Papers); internal address: “To his Excellency / John Adams Esqr / Hague.”; endorsed: “Messs Willinks & Co. / 4. Feb. Ansd 5. 1784.”

This letter and its enclosures should be considered with Wilhem & Jan Willink’s 4 Feb. letter and enclosure, which immediately follow. Although couched in the arcane phraseology and calculations of eighteenth-century Dutch finance, these documents present with remarkable clarity the nature of the loan the consortium was pursuing on JA’s behalf. The diminished creditworthiness of the United States in the eyes of Dutch investors is evident from the consortium’s enclosed “Sheme.” In 1782 JA and the consortium had negotiated a 5 million florin loan at 5 percent interest. Two years later a loan of 2 million florins was the maximum possible, and the undertakers were willing to commit only to the first million. Moreover the cost of the loan would be much higher, first because it would ostensibly be offered at 6 percent, but also because extraordinary gratuities or gratifications were needed to induce investment in American securities. This meant that to the original 2 million florins in principal would be added additional loan obligations to the amount of 690,000 florins. These would be distributed to investors by lottery in the years 1785, 1787, 1789, 1791, 1793, 1795, and 1797. Interest would be paid on the principal, including the additional 690,000 florins, from 1784 through 1799. Then, from 9 1800 through 1806, the 2,690,000 florins in principal would be repaid in installments, but an additional gratification would be paid each year, ranging from 5 percent in 1801 to 15 percent in 1806.

The consortium’s letter and its enclosure set down the basic and, from the standpoint of JA and the United States, very harsh terms of the loan that the consortium proposed to negotiate with the undertakers. But appearances were somewhat deceiving, for the loan’s ultimate success as well as the way in which the interest was paid and the principal redeemed made the loan less onerous than it might appear at first glance. This is evident from the Willinks’ letter of 4 Feb. 1784, and its enclosure, wherein they set down the loan’s effective, as opposed to its apparent, cost. As the consortium indicates, and as the Willinks make clear by their calculations, the United States would pay 6 percent interest on the principal. However, the annual cash outlay of the United States to the investors would be 4 percent. The approximately 2 percent that was not being expended would become due when the principal was redeemed between 1800 and 1806. This meant that between 1784 and 1800 the United States would avoid expenditures of approximately 765,636 florins, enough to pay for the additional loan obligations and other expenses. It also had the effect, as the Willinks indicate in their letter, of producing a more favorable interest rate than if the money had actually been borrowed at 6 percent. For the terms of the loan as the negotiations proceeded, see the plan enclosed by Wilhem & Jan Willink with their letter of 4 Feb. 1784, a later plan enclosed by the Willinks with their letter of 16 Feb., as well as the [9 March] contract for the loan as finally concluded, all below.

The “packets” probably included the original and duplicate of C. W. F. Dumas’ 1 Feb. letter to the Department of Foreign Affairs ( Dipl. Corr., 1783–1789 , 3:480–482).

The enclosures comprised two sheets. The first was headed “Sheme of a Loan,” and the second, “Repartition of the Obligations.”