I have now to inform you that the State of Pensilvania had emitted £500,000 in Bills of Credit, funded in such Manner that there could be no reasonable Doubt of their Redemption. But the public Confidence had been so impaired, that these Bills soon after they came out, rapidly depreciated, notwithstanding the Solidity of the Funds by which they had been secured. The ex-ecutive Authority of Government, therefore, declined issuing more of them than were then in Circulation (being £130,000) and called the Legislature. The Assembly, at their late Meeting, took Measures for the Collection of a very considerable Tax, sufficient to absorp all the Paper then in Circulation, and which was receivable in Taxes, as also a considerable Ballance in Specie. It is therefore evident that, if the Tax has Time to oper-ate before any more of the Paper be issued, it must necessarily rise in Value—

The Assembly did me the Honor to commit this Sum of £500,000 to my Care, for the Purpose of paying to Congress a Ballance due on the Resolutions of that honorable Body of the eighteenth of March 1780. and of procuring the specific Supplies which had been called for, the greater Part of which remained unpaid. In this Situation, it has been my Study to effect both these Objects without making any new Issues of the Paper Money. I cannot easily describe to you the good Consequences which would follow from the Appreciation of it. You will partly conceive them, when I inform you that it is now at five for one, and that my Expectation of procuring the specific Supplies, or rather of furnishing Rations to the Amount of them, is very much founded upon the Rise of its Value.

Finding, however, that the Ballance of Money due to the united States has been already drawn for by them, and that the Holders of those Drafts are very clamorous for Payment, I must put Money into the Hands of the proper Officer immediately. To accomplish this, I have fallen upon an Expedient, which, while it answers that Purpose, will be productive of another very considerable Advantage. To explain which, I must previously inform you, that I have lately refused to draw Bills on Messrs. Le Couteulx & Co: for any other than Specie, so that the Paper will no longer answer the Purpose of procuring a Remittance to Europe. I shall, at the same time, borrow such of it as I can discover to have been hoarded, and, by paying it to the Holders of the Drafts drawn by Congress, throw it again into Circulation. I shall then draw Bills on you for 400,000 Livres, payable at six Month's Sight, or more, for which I expect to get 400,000 Paper Dollars; a Sum sufficient to answer the Demand. I shall draw on Messrs. Le Couteulx & Co: in your Favor to this Amount, payable at sixty Days Sight; which will probably leave four Months for my Operations, But at any Rate it will leave three Months which will be amply sufficient and therefore in three Months after I shall have drawn on you, I will remit you my Drafts on Messrs Le Couteulx & Co. If, in that Period, this Money can be appreciated, it will be a Gain to the united States of the Difference; which you will clearly see to be very considerable. By this Means also, I shall so oeconomize the Funds placed in my Hands, as that I can make them productive of the Supplies from this State.

In mentioning these Supplies, it occurs to me also to make mention of what has passed relative to the Contract you entered into for a Part of them, to the Amount of 400,000 Dollars.— Colo. Menonville spoke to me on this Subject from the Count de Rochambeau, shortly after my Appointment. Upon considering the very slender Situation of our Revenue, or rather the to-tal Want of it, and that the several States had omitted furnishing the specific Supplies demanded of them; I told Colo. Menonville, and I told him truly, that I had but little Prospect of complying with your Promise. It is not easy to convey to your Mind an Idea of the Pain I suffered from being obliged to make this Declaration. I felt for you, for Congress, for America. There is no Man in the World more deeply impressed, than myself, with the Importance of fulfilling every Compact, made by proper Authority. All my Reasonings, my Feelings & my Experience have concurred in producing a thorough Conviction that it is essential; according to the Principles of Justice, from a Regard to our National Honor, and for the Sake of our general Interests. I shall, therefore, notwithstanding what has passed between Colo. Menonville and myself, assiduously endeavour to perform your Promise, and I am happy to add that I am not without Hopes of Success.

With Respect to the Bills I intend to draw on you, I must apol-ogize for the Trouble they will give you which I hope will be but little. It will be only necessary to accept them, and direct the Holders what Banker to apply to for Payment. That Banker will be enabled to make Payment, by the Bill I shall draw on Messrs. Le Couteulx & Co: in your Favor. Perhaps it may be most convenient to send the Bill Holders to them, but this you will be the best Judge of—. It is unnecessary to state any Reasons to you for accepting these Bills, as I cannot suppose you will have the least Hesitation on that Subject. I take this Opportunity, however, of pledging myself to you, that you shall suffer no Inconvenience from honoring them with your Acceptance; as I shall most certainly remit in Time the Bills sufficient to discharge all I draw on you. My Reason for drawing them on you at all, arises from this Circumstance, that I am desirous of keeping the Transaction entirely distinct, and that many Inconveniences would follow from drawing Bills on Messrs. Le Couteulx & Co:, at six Month's Sight, for Paper, while I draw others, at sixty Days Sight, for Specie; especially after my Refusal to draw on them, except for Specie, which Refusal was, as you will perceive, a necessary Part of my Plan. Add to this also, that the Arrangements I had made with the Minister of his most Christian Majesty would not permit of it. When this Transaction shall be finished, that is, when my Remittances to you and my Drafts on you are all paid; be pleased to send me Copies of the Banker's Accounts.

With every Sentiment of Respect I have the Honor to be your Excellency's most obedient & humble Servant.