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Browsing: Papers of John Adams, Volume 11


Docno: ADMS-06-11-02-0067

Author: Adams, John
Recipient: Neufville, Jean de, & Fils (business)
Date: 1781-02-02

Draft Contract for a Loan with Jean de Neufville & Fils

Today the [] Apeared before me [] Notary Publicq the Honorable John Adams Esqr. of the City [] in the State [] in North America at present Residing in the City of Amsterdam in the quality as constitued by Congres of the United States of North America their Agent, and as such specially aúthorised to negotiate moneys in behalf of the said United states, as it apears by the Copie Extract Aúthentically Annexed to the Originall of the present, as also by [] likewise orginally Annexed to the Originall of this present.
And Confessed he the Said Esqr. Apeared in his mentiond quality, and thús for and in behalf of the said United States to have negotiated and received from and for Such to be well and lawfully indebted to Mrs. John de Neufville & Son the Súmm of One Million Gilders Holland Currancy received and perceived in ready money renúntiating for Súch expressly from not having received the Money or the Valúe thereoff.2
Which súmm of One Million Gilders, he the Said Appeared in his said quality and thús for and in the name of the United States of North America, promisses and engages to restitúe and repay lawfully withoút any redúction or damage to the Said Mrs. John de Neufville & Son in Amsterdam or to them who might succeed in their rights with an intrest at 5 p Ct. per Annúm to be Coúnted from this date and fúrther in the manner and on Condition as follows.
First, that of this Loan no restitútion, nor repayment Shall be made, dúring the time of the Ten first Years, butt at the end of the tenth Year the first reimbúrsement shall be made of 20 per Ct. or Two hundred Thousand Gilders, and so consecútively at the end of each of the following four Years a like Súmm of Two hundred Thoúsand Gilders, Such that at the end of the Foúrteenth Year this Whole debt shall entirely be repaid, and at every repayment the intrest of the reimbursed Capitall will cease.
The Intrest shall be paid at every Six Month, at 2 1/2 p Ct. and thús at 5 p Ct. per Annum And for that purpose the summs reqúired for the intrest, as well as for the mentiond rimbursements will be remitted to the Said Mrs. John de Neufville & Son their Heirs, or them who might be in their rights, by or for Congress of the United States of North-America either in good bills of Exchange on Eúrope or in { 99 } Prodúce of North America, all so múch in time, that the money for those bills or Prodúce múst and shall be in Cash and received before the money for the intrest or the summs stipúlated to be rimbursed become dúe.
Second—That the before mentiond Mrs. John de Neufville & Son should be aúthorised and qúalified as he the Said Esqr. apeared in his mentiond quality doth aúthorise and qualify them by this present, to allow shares of intrest to any other person or persons, in this loan, and to negotiate money from them on obligations of one thousand Gilders Holland Currency each, and such only under the sole hand-writing of Said Mrs. John de Neufville & Son, provided the number of those negotiated Obligations or shares of intrest may not exceed the qúantity of One Thousand, And that the same obligations or shares of intrest shall be prothocolled3 by a Notary Publicq residing in this City.
And he the said Esqr. apeared in his mentiond quality did promise that the bonds or obligations thus distribued shall be considerd by him apeared in his mentiond quality and thús by Generall Congress of the United States and by each State separate, of the same force and valúe as if he the Said Apeard had signd and Sealed them with his own hand and Seal; Consenting further the mentiond Esqr. Apeared, that with the same obligations or shares of intrest, shall be given oút orderly to pay of this present, obligation, and that fúrther such arrangements may be made aboút the repayment or rimbursement of the money as the Said Mrs. John de Neufville & Son shall think proper:
For the Complyance and fulfilling of which he the said Esqr. apeared in his Said quality and thús in the name of the before mentiond Generall Congress representing the United States of North America declard specialy to bind all and every one of the Said United States jointly and each of them separate, for the whole with renúnciation of all and every benefitts of law contrary to this present, and especially of the benefitt, de duobus vel pluribús veis debendi,4 or—separating debts; and fúrther all the revenúes and produces rising in the Same States, or any of them, likewise all charges and Taxes in the Same states and every one of them, already laid on and perceived or to be layd on and per[c]eived in futúre Engaging again he the Said Esqr. apeared in his Said quality for all superfluity as such might be reqúired by the Said Mrs. John de Neufville & Son or rather the further concernd in this Loan, than this Loan shall be especially ratified and wholly approved by the United States of North America, { 100 } jointly and each separate, to efectúate the same ratification and aprobation as soon as possible, and thús to procúre a dúe prove, thereof to the Said Mrs. John de Neufville & Son, their successors, or them who might come in their rights, and súch in behalf of the joint concernd in this Negotiation or Loan.
Actúm Amsterdam5
No.6
We the Underwritten John de Neufville & Son as to this purpose especially aúthorised and qúalified by the forestanding Obligation Confess by this present, and on the footing and in Conformity of the abovestanding Obligation, to have received oút of the hands of a Súmm of One Thousand Gilders Holland Currency for a share of the forestanding Negotiation of one Million Gilders in behalf of the United States of North America at the intrest of 5 p Ct. per Annúm, and may this intrest be perceived at every Six Month for 2 1/2 p Ct. to be reckond from this date and to last úntill the repayment and not fúrther.
And shall this rimbursement take place in this manner, that at the end of the tenth Year after the date of the forestanding Generall obligation, two hundred shares of intrest or obligation shall be drawn out by lot, in the presence of a Notary Publicq and witnesses, which then will be rimbursed, and the intrest be payd úntill the intire reimbúrsement and not longer, and so at the end of every of the three following Years when again such a drawing by lott rimbúrsement and repayment shall take place, and at the end of the fourteenth Year the then remaining Two hundred shares of intrest shall be rimbursed and then this Whole Negotiation at an end.
Amsterdam
This belongs to the Number of One Thousand shares, mentiond in the Next Standing Obligation and doth the Capital of the shares by me prothocolled not exceed the Summ of One Million Gilders mentiond in the Same Originall obligation.7
MS (Adams Papers). Filmed at [1781–1782], Adams Papers, Microfilms, Reel No. 355. The MS consists of four pages, each divided into two columns, with the text of the contract in the right column and additions and corrections entered in the left column.
1. Dated from JA's letter to Jean de Neufville & Fils of 2 Feb., below, which approved the translation and printing of the “obligations and Coupons” contained herein. This draft is radically different from Neufville's proposal of 22 Jan., above. Note that the amount to be borrowed was lowered from three to one million guilders and that Neufville & Fils no longer demanded the mortgage of all American lands as security or the consignment of { 101 } twelve million guilders in American produce. Compare this draft with the contract of [1 March], below.
2. This paragraph's meaning is unclear. Presumably once the obligation had been signed it could not be claimed that the money had not been paid. See the 5th paragraph of the contract of [1 March], and note 2, below.
3. An obsolete form of protocol. Its meaning here, taken from old Scottish and French practice, is to register a contract (Henry Campbell Black, A Law Dictionary Containing Definitions of the Terms and Phrases of American and English Jurisprudence Ancient and Modern, 2d edn., St. Paul, Minn., 1910).
4. That is, the states were collectively responsible for the whole debt, rather than only that part which might be apportioned to an individual state. See also the explanation in the contract of [1 March], below.
5. Done at Amsterdam.
6. Written in the left column, opposite the first line of the following paragraph.
7. This paragraph was written in the left column, below the last paragraph in the right column.

Docno: ADMS-06-11-02-0068

Author: Adams, John
Recipient: Neufville, Jean de, & Fils (business)
Date: 1781-02-02

To Jean de Neufville & Fils

[salute] Gentlemen

Having adjusted the Form of the Obligations to be given in the proposed Loan,1 nothing remains but to agree upon the other Terms, respecting the Commission to be allowed, to your House, for receiving the Money from the Lenders, and paying it out upon the Draughts of Congress, and paying the Interest half Yearly to the Lenders, and finally paying off and discharging the Obligations.
I have had much Conversation upon this Subject, with Several Gentlemen of Character and Experience, and am advised, that one Per Cent, to the House for receiving the Money, and paying it to the orders of Congress—one Per Cent for paying off the Interest and one per Cent for Paying of the Principal finally to the Lenders is a just and reasonable Allowance. This I am willing to allow.
There is the affair of Brokerage also which will require Some Explanation between Us.
I should be glad if you would inform me, how much you expect to be allowed for Brokerage, when you engage and employ the Broker?2
But there is one Point that I beg Leave to reserve to myself and to any other Minister or Agent who may be Sent here in my stead. It is this, that I while I Stay and my Successor after me, shall have a right to employ any Broker that I or he may choose, and whenever one or the other may think proper, to dispose of the Obligations, or as many of them as I or he may think proper, and to allow what Brokerage We shall find necessary. The Money however received upon them to be paid into the Hands of your House.3
I should be glad of your Answer, as soon as may be and in the meantime, I have no farther Objection to your getting the Form of { 102 } the obligations and Coupons translated into Dutch and printed, with all Expedition.4
I have the Honour to be, with great Respect Gentlemen your most obedient and most humble servant
1. See the draft contract for a loan, [ante 2 Feb.], above.
2. Any loan raised in the Netherlands involved three separate entities. First was the banker or bankers, in this case Jean de Neufville & Fils, who undertook to raise the loan and assumed responsibility for the contract, printing the obligations, receiving and paying out monies, and other matters relating to the loan. The bankers then secured the services of a broker who offered the loan or portions of it on the bourse; for his services he received a percentage of the amount he handled. The third person, often called the undertaker, purchased portions of the loan from the broker at a discount, depending on the negotiability of the securities, and sold loan certificates to individual investors (Pieter J. van Winter, American Finance and Dutch Investment 1780–1805, transl. James C. Riley, 2 vols., N.Y., 1977, 1:45–46).
3. JA interlined this sentence.
4. In 1809 JA printed this letter in the Boston Patriot and followed it with this explanation of his effort to raise a loan through Jean de Neufville & Fils (JA, Corr. in the Boston Patriot, p. 377–378):
“Such was the dejection and despondency of the whole nation, that I was candidly told by all the gentlemen in whom I had any confidence, that a loan was desperate, except Mr. De Neufville, who was very confident that he could obtain a considerable sum, and was extremely importunate with me to open a loan in his house. That gentleman's politeness and hospitality drew all Americans to his house, and he made them believe that he could do much, if I would authorise him. I had spies enough upon me, from England, France, and America too, very ready to impute blame to me. Congress were constantly drawing upon me, and there was the utmost danger that their bills would be protested. If this event should happen, I knew that representations in private letters would go to America and to France, that this fatal calamity was wholly owing to my negligence and obstinacy in refusing to open a loan in Mr. De Neufville's house. I thought it my duty, therefore, to try the experiment. It could do no harm, for we had certainly at that moment, no credit to lose. The loan was opened, and all the industry, enterprise and credit of Mr. De Neufville, never disposed of more than five obligations, amounting to five thousand guilders, three thousand of which were lent by Mr. John Luzac, who had previously promised me to advance that sum whenever my loan should be opened, though it should be in the house of Mr. De Neufville. I was not disappointed, however, in the result, because I had absolutely no expectations.”
Nicolaas and Jacob van Staphorst, the principals of an Amsterdam mercantile firm that would take part in JA's loan in 1782, disagreed. They met JA in 1780 soon after his arrival in the Netherlands (vol. 10:190–191) and sought to advise him on financial matters. In a letter of 24 Nov. 1785 to the secretary for foreign affairs, the van Staphorsts made clear the nature of their objections to an American loan in 1781:
“We acquainted him [JA] with great Regret, the Impossibility of Undertaking Same at this Period with the Probability of Success, and the disagreable Consequences that would ensue from a Failure. Which his Excellency appeared to take in good Part, and promised not to proceed further in this Business without speaking to us on the subject. A short time however convinced us the little Dependence Mr. Adams's Promises merited. For this Gentleman instead of following the Stream, by accommodating himself to the Dispositions and conciliating the Confidence of the Hollanders, which might been easily secured to the great Benefit of the United States; on the contrary attempted to force Matters, and with an Opinionatedness peculiar to himself, risqued to overset every Measure. He in consequence thought fit, contrary to the best Advice, which had been given him to open a Loan at the House of Messrs. John de Neufville & Son, Which was generally clamoured against, as we advised him would be the Case. We soon discovered from what passed, that Mr. Adams was much inclined to give Ear to such Persons as flattered him, and Spoke agreable to his Wishes, which not being our character, nor in our Opinion consistent with the Interest of the United States, it was not { 103 } surprizing that Mr. Adams and Us were not so frequently in Conversation together, and that we sought less the Company of a Man whose way of Thinking corresponded so little with our own” (PCC, Misc. Papers, Reel No. 4, f. 684–699).
Cite web page as: Founding Families: Digital Editions of the Papers of the Winthrops and the Adamses, ed.C. James Taylor. Boston: Massachusetts Historical Society, 2014.
http://www.masshist.org/apde2/