Chapter 3 of 21 · 9062 words · ~45 min read

CHAPTER III

HAMILTON IN THE SADDLE

There was quite enough in the picture of the handsome, penniless Hamilton, at the age of thirty-two, striding upon the national scene with the air of a conqueror to undertake the solution of the problem on which the existence of the young Republic depended, to appeal to the popular imagination. The mystery and romance of his history, the dash in his manner, the shimmer of his genius, interested all and fascinated many of his contemporaries. The audacious gayety with which he faced his task imparted a feeling of confidence to those who did not know, as many did, just what was in his mind. He set to work with an enthusiasm that smacked of inspiration, for it was a task to his taste.

With the startling effect of a magician at his tricks he created the machinery of his complicated department, selected his assistants with discrimination, trained them with meticulous care in their duties, outlined his plans for revenue immediately required, and sat down with joy to the preparation of his ‘Report on the Public Credit,’ which was to proclaim the public faith and establish the Nation’s credit.

The mere presence of this youthful figure at the mahogany desk commanded confidence. Here was a man who was primarily interested in the rights of property, who believed in the sanctity of contracts and had the courage of his convictions. Even as he was writing his ‘Report,’ he loomed large as the man of the hour. His close associates foresaw the nature of his recommendations. The mercantile and financial interests plumed themselves upon a triumph. Within a month after his appointment a contemporary rhymester put in verse the counting-room conception of the man:

’...young Hamilton’s unshaken soul The wayward hosts of anarchy control-- And while the Senate with his accents rung A full conviction followed from his tongue.’[199]

His plans, given in confidence to some, were soon whispered among the politicians and the merchants of New York, Philadelphia, and Boston, and the market price of public securities in the cities rose fifty per cent two months before Congress convened.

It was not until in early January that the ‘Report’ was read in House and Senate. His wish to present it personally was denied, not by his political enemies as his partial biographers contend, but by the supporters of his plan.[200] In the galleries of the House eager speculators were closely packed. They overflowed and filled the lobbies. Some were drawn by mere curiosity, some were the original creditors who had waited long for their reward, but the greater number were speculators, who, in anticipation of such a recommendation, had bought freely of the skeptical holders at ridiculously low prices. Not a few of these poured forth into Wall Street at the conclusion with the exhilarating knowledge that a fortune was within their grasp.

In the Senate the ‘Report’ was heard in secret and in ‘awful silence,’ for the elder statesmen met behind doors closed and locked. Most of these listened with approval, but the rheumatic Maclay, who had been puzzled for some time with ‘the extraordinary rise in public securities,’ wrote that night in his journal that Hamilton ‘recommends indiscriminate funding, and, in the style of the British Minister, has sent down his bill.’ There were some complaints that ‘a committee of speculators in certificates could not have formed it more to their advantage.’ In truth, ‘it occasioned many serious faces,’ and Maclay himself was ‘struck of a heap.’[201] But the prevalent note was one of jubilation. In New York, enthusiasm in the coffee-houses; in Boston, ‘great applause’;[202] in other commercial cities, Philadelphia, Charleston, Baltimore, approbation, with reprobation for objections.[203]

All men of honor sympathized with the purpose of discharging the debt. The repudiationists were among the ignorant and the vicious. Few at the moment found fault with the funding system, though some would have preferred a speedy liquidation through the sale of the public lands. Then--suddenly--a low murmur of protest, followed by acrimonious attacks. Thousands of the original creditors had been ‘swindled’ out of their certificates for a song--were these, who rendered Revolutionary services, to be taxed to ensure exorbitant profits to the speculators? Why should the Federal Government assume the debts contracted by the separate States--debts unevenly distributed? And what was the purpose of the proposal that the Government should be prohibited from paying more than two per cent of the principal a year? The indignation of the insurgents, at first a glimmer, became a flame. The greater part of the certificates were in the hands of the prosperous who had taken advantage of the necessities of the original holders--Revolutionary soldiers, small farmers, hard-pressed country merchants. The funding system would tax all the people to pay to the rich a hundred cents on the dollar for evidence of debts that had cost them fifteen and twenty. With the people taxed to pay the interest--it was proposed to perpetuate the debt. Thus, for generations, perhaps, as many reasoned, the Government would operate for the enrichment of the few already rich, and the masses would pay the piper.

Had Hamilton been disposed to frankness, he would have smiled his acknowledgment of the charge. One of his biographers has conceded that through this system he hoped to ‘array property on the side of the Government,’ by giving it a financial interest in the Government, and ‘to assure to the property of the country a powerful influence upon the Government.’[204] Having ‘been unable to introduce a class influence into the Constitution by limiting the suffrage ... with a property qualification,’ he hoped through his financial system to accomplish his purpose in another way.[205]

There was nothing diabolical in the plan--coming from one who looked upon the masses as lawless and unfit for self-government. His obsession was a strong, stable government--and to sustain it he required the interested devotion of the propertied class. The astonishing thing is that the comparatively crude Maclay from the wilds of Pennsylvania and the leather-lunged James Jackson from sparsely settled Georgia should have caught the full significance of it all before it dawned on Jefferson and Madison. The latter thought the ‘Report’ ‘well digested and illustrated,’ and ‘supported by very able reasoning,’ but after a while he, too, was depressed with the injustice to the original creditors who ‘were most instrumental in saving their country,’ and concluded there was something ‘radically wrong in suffering those who rendered a bona fide consideration to lose seven eighths of their dues, and those who had no particular merit toward their country to gain seven or eight times as much as they advanced.’[206]

Meanwhile, speculation was manifesting itself with incredible audacity and mendacity. The greater part of the securities in the hands of original creditors were in the hands of soldiers, farmers, and merchants in the remote interior. To most of these, they had come to mean so much worthless paper. No telegraph could flash the news into the back country of Georgia and North Carolina that Congress was about to legislate to par the promises to pay. Weeks or months would pass before the proceedings in New York could be known and comprehended by holders of the paper living in the woods of the Carolinas or on the banks of the Savannah. Poor, and mostly ignorant, they had no correspondents in the coffee-houses to write them of the activities at Federal Hall; and even if they had, it required weeks for a letter to reach them.

But members of Congress knew what to expect--for they were the actors in the drama; and their friends, the capitalists and merchants of the cities, knew--for they had been informed. The unscrupulous and adventurous soldiers of fortune on the scene comprehended the opportunity at a glance. The day after the ‘Report’ was read, the city buzzed with the gossip of the speculators. One Senator, making calls in the congressional circle, found it almost the sole topic of conversation. He heard that Robert Morris of the Senate, who had been consulted by Hamilton, ‘must be deep in it, for his partner ... had one contract for $40,000 worth.’ It was whispered that ‘General Heister had brought over a sum of money for Mr. Morris for this business.’ Senator Langdon, it was noted, was living with a Mr. Hazard ‘who is an old and intimate friend of Mr. Morris,’ and he admitted that he had followed buying certificates for some time past.’ ‘Ah,’ said the visiting Senator, ‘so you are one of the happy few who have been let in on the secret’--and Mr. Hazard seemed abashed. It was understood that Representative Fitzsimons of Philadelphia was likewise concerned in the business.

Four days after the ‘Report’ was read, ‘expresses with very large sums of money on their way to North Carolina for purposes of speculation in certificates’ splashed and bumped over the wretched winter roads, the drivers lashing the straining horses. Two fast-sailing vessels, chartered by a member of Congress who had been an officer in the war, were ploughing the waters southward on a similar mission--and this scandalous proceeding was to be mentioned frequently in the subsequent debates. ‘I really fear,’ wrote Maclay, ‘the members of Congress are deeper in this business than any others.’[207] Whether they were deeper or not, they were deep enough, and numerous enough to hold the balance of power in the body that legislated the certificates to par. These ranged from Robert Morris, the chief legislative agent of Hamilton in the Senate, to Fisher Ames, who was his most eloquent defender in the House.[208] In later years Jefferson was to record in justice to Ames that his speculative activities had been greatly exaggerated and that he had acted as an agent in the enterprises of his Boston friends, Gore and Mason.[209]

So thoroughly did this money-madness take possession of the minds of men that even the puritanic John Quincy Adams was to write his father, without a homily, that by September of 1790, Christopher Gore, the richest lawyer in Massachusetts, and one of the strongest Bay State members of Hamilton’s machine, had ‘made an independent fortune in speculation in the public funds’; and that other leaders of the bar[210] had ‘successfully engaged in speculation’ by playing at ‘that hazardous game with moneys deposited in their hands’ by clients at a distance. They took the chance of becoming ‘masters of sums to an equal amount before they have been called upon for payment.’[211] Maclay thought ‘there is no room to doubt but that a connection is spread over the whole continent on this villainous business.’[212] Everywhere men with capital--and a hint--were feverishly pushing their advantage by preying on the ignorance of the poor. Thus, paper held for years by the private soldiers was coaxed from them for five, and even as low as two, shillings on the pound by speculators, including leading members of Congress, who knew that provision for the redemption of the paper had been made.

In all this, Hamilton had no part and no responsibility beyond having made indiscreet disclosures of which his friends availed themselves, and through buying and selling through his agents in New York and Philadelphia for his brother-in-law.[213] Just how he viewed the scandalous proceedings in the earlier stages we do not know. They were not without defense from his supporters. The obsequious John Fenno took notice of the gossip with a defense of speculation in the ‘Gazette.’ Were not moneyed men ‘the props of the infant credit of the United States?’[214] The dark insinuations of the gossips, the criticism of the ‘rabble,’ we may be sure caused Hamilton no concern. Surveying the field at the beginning of the battle, he must have been content. He saw the financiers, the commercial interests of the large centers, including the speculators, enlisted under his banner. The influential Society of the Cincinnati, composed of Revolutionary officers, men of means who had been able to hold on to their paper, gave dignity to his cause. With its compact organization in every State, and its system of correspondence, it was an engine of tremendous power. The social and intellectual circles were flying his flag. He looked upon his work and called it good.

III

With the first discussion in the House, it was apparent that speculation was to play a conspicuous part in the debates. The speculators packed the galleries, overflowed into the lobby, causing the complacent Theodore Sedgwick of Massachusetts, himself a speculator, to insist that the ‘ardent expectations of the people on this subject want no other demonstration than the numerous body of citizens assembled within these walls.’ The effect was different on the pugnacious Jackson of Georgia. ‘Since this Report has been read,’ he shouted, with a contemptuous glance at the eager gallery, ‘the spirit of speculation ... has arisen and been cherished by people who had access to information the Report contained, that would have made a Hastings blush to have been connected with, though long inured to preying on the vitals of his fellow man. Three vessels, sir, have sailed within a fortnight from this port freighted for speculation.’[215]

The unctuous Sedgwick was melting suavity. Speculation within reasonable bounds was not bad, but action should be taken with all possible speed to stop it; and the troublesome Jackson returned to the attack--this time on New York City. He wished to God Congress had met in the woods and out of the neighborhood of a populous town. The gallant veterans, driven by economic necessity to the wilderness, were being robbed by these speculators of the pittance a grateful country had bestowed. Since the assumption of State debts was proposed, why not postpone action until the various legislatures could express the sentiment of the States? ‘Then these men may send out other vessels to countermand their former orders; and perhaps we may yet save the distant inhabitants from being plundered by these harpies.’[216]

This line of attack had not been anticipated, and Hamilton was not the man to take anything for granted. His well-groomed figure was seen moving nervously about the lobbies of Federal Hall, within a few days after the commencement of the debate. One of his enemies observed that he ‘spent most of his time running from place to place among the members.’[217] In the evenings he gathered his more influential supporters about him at his home. At his table he brought his most seductive charms to bear upon the doubting. Time was all-important and indefinite delay might be fatal.

With the thunder of Jackson’s ugly charges reverberating through the streets, taverns, coffee-houses, Hamilton was ‘moving heaven and earth for his funding system.’ The commercial interests and the members of the Cincinnati hastened to join the lobby, which began to seek out the wavering or the doubtful in their lodging-houses. A fashionable minister found his way to the quarters of Speaker Muhlenberg and Senator Maclay to extol the policies of the dynamic young Secretary, and ‘argued as if he had been in the pulpit.’ Time, too, for a redoubling of effort, for there were rumors that Madison, the strongest man in the House, had been unpleasantly impressed with the fast-sailing vessels and the expresses jolting over the roads southward. A bitter attack had appeared in one of the papers which gossip ascribed to the popular George Clinton.[218]

In the House--still harping were the foes on speculation, when with a benevolent expression Sedgwick rose with saccharine urbanity to regret the vice of speculation, and declare himself ‘totally disinterested,’ albeit he was financially concerned. It was only his distress over speculation that admonished him to speedy action to minimize the evil. It was really unfortunate that so much heat had been engendered. After all, were not ‘a great and respectable body of our citizens creditors of the United States?’ It would be tragic were these animosities to create ‘factions among the people.’

‘A danger there?’ bellowed Jackson, the incorrigible infant terrible. ‘Do not gentlemen think there is some danger on the other side? Will there not be grounds for uneasiness when the soldier and the meritorious citizen are called upon to pay the speculator more than ten times the amount they ever received from him for their securities?’[219]

Meanwhile the fight was spreading from Federal Hall to the newspapers where congressional courtesy imposed no restrictions on the temper. Sinister stories were finding their way into print. ‘Several officials in conjunction with Robert Morris and wealthy contractors “were” at the bottom of this new arrangement.’ If it succeeded, Robert Morris would benefit $18,000,000, Jeremiah Wadsworth would profit $9,000,000 and Governor George Clinton would make $5,000,000.[220]

It was under these conditions, with the speculators packing the galleries, with the lobbyists, legitimate and illegitimate, buzzing through the corridors, with the most amazing rumors floating about the streets, that James Madison, who had remained silent heretofore, rose in a crowded House to fire the first fun in the Jeffersonian war on the financial policies of Alexander Hamilton.

Here was a man at whom the Federalist leaders dare not sneer. A stranger, looking down from the gallery, would have been at a loss to understand the deference with which members hung upon his words. His personal appearance was disappointing. The short little man dressed in sober black, with a bald head, and a little protuberant in front, whose lower limbs were slight and weak,[221] was surely not meant to ride on the whirlwind and direct the storm. The impression of physical weakness he conveyed did belie the fact. In the mild blue eyes there was much to suggest the meditative philosopher, nothing to hint of the fighter. His voice was so weak that even in the cozy little chamber he could scarcely be heard.[222] He spoke in low tones, without gesture or excitement, almost like a man communing with himself in the seclusion of his closet. And yet he commanded a hearing vouchsafed to few. It was the triumph of character.

Here, too, was a man with a background second to none in the infant Republic. An ailing body had obsessed him in youth with the premonition of an early death, and, feeling the futility of entering on any pursuit, he had sought consolation in his books. He not only consumed, he assimilated. He not only read, he thought. Thus he became something more than a learned man--he developed into a political philosopher ‘worthy to rank with Montesquieu and Locke.’[223] At the time he rose to propose an amendment to Hamilton’s plan there was not a man in America who was his peer in the knowledge of constitutional law or history. Nor was there a man, either, whose support Hamilton more eagerly coveted. Even the jealous Ames conceded him to be ‘our first man,’ consoling himself for the concession with the comment that ‘I think him too much of a book politician and too timid in his politics,’ and that ‘he speaks decently as to manner and no more.’[224]

But the ill-natured jealousy of the more ornamental Ames failed to take account, as most of his colleagues did, of the important practical use to which he had put his knowledge of the battles he had fought and the victories he had won. No one in either branch of Congress or at the head of any of the departments had approached his services in the framing of the Constitution. It was his genius that conceived the Virginia plan which became the basis of the agreement. At many critical junctures his speeches had dissipated the gathering darkness with their light. His pen, unknown to many at the time, had recorded the story of the Convention. His contributions to ‘The Federalist’ had been quite as important, if not so numerous, as those of Hamilton; and the fight he waged in the Virginia Convention for ratification was quite as Titanic and conclusive as that of Hamilton in New York, but with this difference--Hamilton was confronted by Melancthon Smith, while Madison had to cross swords with Patrick Henry, with the powerful George Mason and the accomplished Pendleton.

He was not an orator of frills and fancies, magnetic and dramatic, appealing to the passions and emotions, but he was formidable in debate. In the speeches of none of his contemporaries is found such erudition, more driving logic, such tact and moderation of statement, or greater nobility of sentiment, fairness, justice. If they are a bit heavy in their sobriety, the occasion called for something remote from theatrical frivolity. His grace was in his reasoning, not his rhetoric--and yet his style would have given him a foremost place at Saint Stephen’s.

It is not surprising that such a man should not have been a favorite with the crowd. There was a diffidence in his manner, a formality and precision in his method, a quiet dignity in his bearing that discouraged familiarity. He was too absorbed in his work to fit in with the social festivity of his time. Only at his own table and among his intimates did he appear in the rôle of ‘an incessant humorist’ and ‘keep the table in roars of laughter over his stories and his whimsical way of telling them.’[225] Even his letters read like state papers. But there were a few, greater than Ames, who appreciated him. These were the three most important personages of his time--Washington, Hamilton, and Jefferson.

Washington consulted him and made use of his pen. Hamilton cultivated him. Jefferson loved him as a son. His relations with the latter were no less than beautiful. Through many years they constantly interchanged visits, corresponded regularly, and traveled together whenever possible. A strikingly incongruous pair they must have seemed as they plodded along country roads together, or rode to and from Philadelphia together in Jefferson’s carriage--the tall, thin, loose-jointed, and powerful master of Monticello, and the short, frail, bald-headed Madison. But the incongruity was in their physical appearance only, for they had much in common--a common sweetness of disposition, a common code of political principles and morals, a common liberality of views, and a common passion for knowledge. The older man paid tribute to his protégé’s qualities long after both had passed from active public life: his ‘habits of self-possession which placed at ready command the rich resources of his luminous and discriminating mind’; his language ‘soothing always the feelings of his adversaries by civilities and softness of expression’; his ‘pure and spotless virtue which no calumny has ever attempted to sully’--all qualities that made him a congenial companion for the philosopher who shared them in a large degree.[226] Observing Jefferson’s happiness at the inauguration of his successor, a lady who knew them both intimately wrote what all who knew them felt: ‘I do believe father never loved a son more than he loves Mr. Madison.’[227] But when Madison rose that cold February day to make his first attack on Hamilton’s programme, he acted on his own volition and without consultation with the man who was to be his chief.

The character of Madison’s speech in favor of discrimination between the original holders and the purchasers of securities was not so open to attack as that of the impulsive and loose-thinking Jackson. He began in a manner to conciliate his hearers, matching Hamilton in his insistence on the sanctity of the debt and the necessity for its discharge. The question is--to whom is the money due? There could be no doubt in the case of the original holders who had not alienated their securities. The only rival pretensions were those of the original holders who had assigned and the present holders of the assignments.

‘The former may appeal to justice,’ he said, ‘because the value of the money, the service or the property advanced by them has never been really paid to them. They may appeal to good faith, because the value stipulated and expected is not satisfied by the steps taken by the Government. The certificates put in the hands of the creditors, on closing their settlements with the public, were of less value than was acknowledged to be due; they may be considered as having been forced on the receivers. They cannot therefore be adjudged an extinguishment of the debt. They may appeal to the motives for establishing public credit, for which justice and faith form the natural foundation. They may appeal to humanity for the sufferings of the military part of the creditors who never can be forgotten while sympathy is an American virtue.’

Admitting that the purchaser also had a claim, he proposed a plan designed, as he thought, to do justice to both--to pay the original holder in full, and, where there had been an assignment, the assignee to receive the highest market value and the original holder whatever remained over.[228] The plan spread consternation. At the Knoxes’ dinner table that night, where members of Congress and diplomats were gathered, it was almost the sole topic of conversation. In the coffee-houses, where the speculators gathered about their mugs, Madison was denounced as a dreamer and an enemy of public faith. The more cautious regretted the insurmountable difficulties of the scheme. This was felt by Madison as the one legitimate argument in opposition, and writing Jefferson three days later he made the admission with the suggestion that ‘they might be removed by one half the exertions that will be used to collect and color them.’[229] It was not until four days later that the Hamiltonian leaders attacked the plan with their heavy artillery. One by one they rushed to the assault. ‘It is not pretended,’ cried Sedgwick, ‘that any fraud or imposition has been practiced’--which is precisely what was charged. If the original holders lost, it was their own fault. It was too bad. He really sympathized with their misfortunes. But business was business. There was ‘no fraud on the part of the holder,’ echoed Laurance of New York--who knew that the town was humming with the charge. At any rate, ‘the general opinion of men of property is in favor of it.’ No public bodies like Chambers of Commerce were against the Hamilton plan. As for ‘the people’--newspapers and pamphlets could not be taken as expressive of public opinion. William Smith of Charleston had heard few advocates of discrimination ‘in society.’ As for the newspapers, they appeared on both sides. And why so much sympathy with the original holders?

It was reserved for Ames, whose friend Gore was getting rich on speculation, to take a stouter stand. Why should not ‘the seller who sold for a trifle be taxed to pay the purchaser?’ he asked. ‘He certainly ought to fare as other citizens do. If he has property, then the plea of necessity is destroyed; if he has none, then his taxes will be a mere trifle.’ And public opinion against it? Then ‘all the more duty on Government to protect right when it may happen to be unpopular; that is what Government is framed to do.’ Away with maudlin sentiment--it was not the function of the State to ‘rob on the highway to exercise charity.’[230]

Meanwhile the commercial organizations of the larger towns were summoned to the field against discrimination, and they responded--even in Richmond. ‘It is the natural language of the towns,’ wrote Madison, ‘and decides nothing.’[231] As the debate proceeded, Wall Street swarmed with the curious who could not get into the House where the speculators packed the galleries, and lined up deep behind the railing in the rear of the chamber. Petitions began to pour in. Passions rose. ‘I do not believe the crowd in the gallery consists of original holders,’ shouted one speaker with a contemptuous glance at the covetous group bending over the railing.[232] Soldiers! ‘Poor soldiers!’ sneered Wadsworth--he who had sent the two fast-sailing vessels to the South--‘I am tired of hearing about the poor soldiers. Perhaps soldiers were never better paid in any part of the country.’[233]

Two days later, Madison returned to the attack in a speech unusually spirited for him. Only when he had parted with his self-respect ‘could he admit that America ought to erect the monuments of her gratitude, not to those who saved her liberties, but to those who had enriched themselves on her funds.’ It was his last effort. He had spent himself to the utmost. A spectator entering the House late in the day found him ‘rather jaded.’[234] He had incurred the hate of the Hamiltonians without having consolidated all the opposition in favor of his plan.

Three days later--it was Sunday--that extreme democrat Senator Maclay, who was indifferent to Madison’s plan because opposed to funding altogether, sat down in his boarding-house and framed a plan of his own looking to the extinguishment of the debt through the sale of public lands. Having satisfied himself, he went forth in search of Thomas Scott, his colleague. But ‘shame to tell it--he a man in years and burdened with complaints--had lodged out and was not home yet.’ Pity that ‘a good head should be led astray by the inordinate lust of its concomitant parts.’ At length the old ‘roué’ was found, and he urged that it be submitted to Madison at once.

The next day found Maclay indignantly chafing at Madison’s lodging-house because it was ‘a long time’ before he appeared. As the radical from Pennsylvania read his plan, it seemed to him that Madison ‘attended to no one word, being so much absorbed in his own ideas.’ Maclay handed him the paper, and Madison handed it back without glancing at it. Alas, thought the radical, ‘his pride seems of the kind that repels all communications.’[235] It was not an easy task to organize the forces of Democracy.

The next day Madison’s plan was voted down. It was found long afterward that of the sixty-four members of the House, twenty-nine were security-holders.

One thing, however, had been accomplished--the public interest had been awakened. The tongue of criticism had been loosened. The man in the street began to hold forth. It was all beyond him--as problems of finance were beyond Madison himself; but he could understand that a policy had been adopted that would be advantageous to the rich, profitable to the speculator, and mean loss to the common soldier. In the commercial centers of the cities Madison became anathema. Young Adams reported to his father that in Boston ‘Mr. Madison’s reputation has suffered from his conduct,’ albeit so respectable a character as Judge Dana had adopted Madison’s views.[236] The immediate reaction through letters to the papers was so bitter that Fenno was moved to a homily under the caption, ‘Honor Your Rulers,’ in which he pointed to such outrageous derelictions as expressions of doubt concerning the propriety of the proceedings of Congress.[237] These expressions had gone far beyond a mere questioning of the wisdom of Congress. ‘A War Worn Soldier’ thought it ‘happy there is a Madison who fearless of the blood suckers will step forward and boldly vindicate the rights of the widows and orphans, the original creditors and the war worn soldier.’[238] Another ‘Real Soldier’ described ‘the poor emaciated soldier, hungry and naked, in many instances now wandering from one extreme part of the country to another.... But thank God there lives a Madison to propose justice....’[239] An uglier and more pointed note was struck by ‘A Farmer’ in Pennsylvania. ‘Would it not be a good regulation,’ he wrote, ‘to oblige every member of Congress ... to lay his hand on his heart and to declare that he is no speculator; and that he did not come forward to claim for himself the price of the blood or the limb or the life of the poor soldier?’[240] Another wrote to ‘gentlemen who by superior wealth have monopolized the public securities’ that if honor and public faith called for the maintenance of the paper at par then, there was more occasion for it ‘when they were in the hands of those poor people to whom they were justly due, who had implicitly pinned their faith on your sheaves.’[241] ‘An Old Soldier’ recalled Washington’s pledge to see justice done the common soldier. ‘Ample means are said to be now about to be provided, not for their relief, but to enable eight or nine hundred per cent gain on the purchase money of the speculator.’[242] ‘Ah well,’ wrote ‘A Citizen’ of Boston, ‘Madison, Jackson and others in favor of discrimination in funding the public debt have probably immortalized their memories.’[243]

Their letters probably reflect the talk among the workers on the wharves, the pioneers on the fringe of the forests, the gossips of the taverns. Rightly or wrongly, a spirit of resentment had been aroused--a feeling in the breast of many that their interests were being subordinated by the Government. This sentiment was to grow and to increase the trouble of Hamilton in the next step toward the adoption of his funding system.

VII

With the easy victory, however, the Hamiltonians entered with gayety upon the next step--the Assumption of the State debts--determined to rush it through. On the very night of the day discrimination was defeated, the Pennsylvania delegation, on the suggestion of Robert Morris, met at the lodgings of Representative Fitzsimons of Philadelphia to ‘consider’ the matter of Assumption. One glance convinced the keen-eyed Maclay that the meeting was for ratification, not for consideration purposes. ‘By God,’ swore Morris, ‘it must be done!’ George Clymer, another of the Hamilton Reliables, bubbled with enthusiasm over the advantage that would accrue to Pennsylvania. Maclay was embarrassed by the almost affectionate comradery of some of his colleagues. Why should the delegation not hold weekly social sessions and work in harmony? Fitzsimons’s lodgings would be the very place to meet. Yes, agreed Morris, and they could have wine and oysters.[244]

A few days later Muhlenberg, returning to Maclay’s lodgings from a levee at the presidential mansion, declared with intense emphasis that the State debts must be assumed--which impressed the suspicious Senator as ‘the language of the Court.’[245]

But it was not to be so simple as all that. Assumption, argued many, would but extend the scope of the operations of the hated speculators. It was another move to mortgage the Government to the capitalists. The greater part of the speculating gentry were in the North; they would soon accumulate all the State certificates of the South into their own hands and one section would be paying taxes to increase the fortunes of a favored class in another.

There was another reason for the revolt of the Southerners--which, reversed, would have operated quite as powerfully on the Northerners. The States with the largest unpaid debts were in the North, Massachusetts with the greatest debt of all. Virginia, which led the opposition, had liquidated most of her debt. There is nothing inexplicable in the objections of the Virginians, who had paid their debt, to being taxed to help pay the debt of Massachusetts and Connecticut.

This was appreciated by many in the North, and a citizen of Stockbridge, Massachusetts, writing for a New York paper, thought it unfair. If the ‘leveling system’ was vicious as applied to men, it was quite as bad when applied to States. Then, too, ‘the public creditors, the most opulent part, of the community, would, by this means, be detached from the interest of the State Governments and united to that of the general Government.’ This aimed at the annihilation of the State Governments and the perpetuation of the debt.[246] Thus an attack began on the general policy of funding, taking an ugly form, appealing to class prejudices. ‘A number of drones are brought into society and the industrious bee is forced to furnish them with all the honey of its search.’[247]

But this opposition from the unimportant meant nothing to Hamilton. In those days, and for many days to come, it was only necessary to know what Oliver Wolcott[248] said or wrote to know what his master thought. Writing his father about this time, Wolcott gives us sketchily the operations of Hamilton’s mind. This matter of assumption was connected with ‘the engine of government.’ Since ‘the influence of the clergy, the nobility and the army’ was impossible, ‘some active principle of the human mind can be interested in the support of the Government.’ It would never do to have ‘civil establishments,’ but there was an influential class in existence--the moneyed class. They could and should be bound by interest to the general Government. What more ‘active principle’ of the human mind than the desire for wealth? And if the capitalists looked to the Federal rather than to the State Governments for their money, what better ‘engine of government’ than that? ‘For these reasons,’ wrote Wolcott, ‘I think the State debts should be assumed.’ True, it would make the debt of the United States ‘inconvenient,’ the taxes would be ‘burdensome,’ and ‘will appear to be just only to those who believe that the good attained is more important than the evil which is suffered.’[249]

It was fear of the effect of these ‘burdensome taxes’ on the popularity of the Federal Government that led some men, including Madison, into opposition.[250] Some of the Hamiltonians were alarmed, fearing that ‘such bold politics are unfitted to ... the infant resources’ of the young Republic.[251] Every enemy of Assumption was not hostile to the central Government, but all who were jealous of the sovereignty of the States were in opposition. Rufus King, the brilliant and virile Hamiltonian leader in the Senate, was convinced that in New York ‘the anti-federalists think that the advantages to be derived to the State from the retention of that debt are so great and important that they stand ready to accede to any terms which the creditors may propose.’[252] About the same time the unreconciled Patrick Henry was writing James Monroe that ‘it seems to be a consistent part of a system I have ever dreaded,’ and that the ‘subserviency of Southern to Northern interests are written in Capitals on its very front.’[253]

Such was the atmosphere in which the second battle began.

VIII

On the opening of the debate one champion of Assumption[254] let the cat out of the bag with the statement that ‘if the general Government has the payment of all the debts, it must of course have all the revenue, and if it possesses the whole revenue, it is equal, in other words, to the whole power.’ ‘Yes,’ cried the irrepressible Jackson in stentorian tones, ‘if it lulls the Shays of the North it will rouse the Sullivans of the South’--and the fight was on.

Almost immediately Assumption became confused with the whole system of funding, and a week after Madison had made his argument against the former, he was compelled to return to a defense of the latter, not as something he desired, but as a necessity imposed by unescapable conditions. Madison was too much of a statesman to be a demagogue.

Very soon, Maclay, watching the proceedings in the House with ferret eyes, thought he observed ‘the rendezvousing of the crew of the Hamilton galley.’ He found that ‘all hands are piped to quarters.’ The plan to force a vote on March 8th was abandoned toward evening, and that night he heard it was to await the arrival of Representative Vining of Delaware, and to give Hamilton time ‘to prepare him properly.’[255]

There was some mystery about Vining, and wild rumors were afloat that some one had said that he would give the new arrival a thousand guineas for his vote. ‘A thousand guineas,’ snorted Maclay, with a twinge in his gouty knee, ‘they could get him for a tenth that sum.’

Meanwhile, there was feverish activity among Hamilton’s supporters in Congress and out. Government officials left their desks to become lobbyists. The clergy turned politicians and solicited. The speculators were active. The members of the Cincinnati were mobilized and marched. Two Congressmen, one lame, the other sick, were carried to the House to meet a possible emergency. Another, planning to leave town, was ordered to his post.[256] The friends of Assumption were becoming uneasy. Letters in opposition were pouring in from men like Doctors Rush and Logan of Philadelphia and were being peddled about by Maclay to members of the Pennsylvania delegation. Alas, that he should have found ‘a woman in the room’ with old man Scott again.[257]

These activities so wrought upon the nerves of Robert Morris that he sought a new avenue of approach to his erratic colleague. Would Maclay join Morris in some land speculations? The former was suspicious, but interested.[258] For several days Morris talked land--the play continuing for eleven days. The debate was becoming bitter. The able, bitter-tongued Ædanus Burke of South Carolina made a ferocious attack on Hamilton, and the lobbies, coffee-houses, streets, buzzed with talk of a duel.[259]

The distress among Hamilton’s friends increased. In the Senate, shut off from the curious eyes of the public, feelings could be manifested with some abandon. Ellsworth and Izard ‘walked all the morning back and forward.’ Strong of Massachusetts and Paterson of New Jersey ‘seemed moved but not so much agitated.’ King ‘looked like a boy who had been whipped.’ And the hair on Schuyler, a heavy speculator and father-in-law of Hamilton, ‘stood on end as if the Indians had fired at him.’[260]

But courage was revived, and there was unwonted activity. Most of Washington’s household joined the lobby--Humphreys, Jackson, and Nelson, his secretaries--and were particularly attentive to Vining. This was the result of a caucus of Hamilton’s supporters the night before when the decision was reached to risk a vote.

Three days later, the chance was taken, and Hamilton lost by two votes. The scene was dramatic. Sedgwick made an ominous speech and, on being called to order, took his hat and left. ‘A funeral oration,’ sneered Maclay. When he returned he seemed to have been weeping. Even the eyes of the self-contained Fitzsimons ‘were brimming full’ as he went about ‘reddened like scarlet.’ Clymer, ‘always pale,’ was ‘deadly white,’ his lips quivering. But ‘happy impudence sat on Laurance’s brow.’ Wadsworth, who was financially interested, ‘hid his grief under the rim of a round hat,’ and Boudinot,[261] another speculator, left his distress naked to his enemies--‘his wrinkles rose in ridges and the angles of his mouth were depressed and assumed a curve resembling a horse shoe.’[262]

The speculators poured out of the galleries and into the coffee-houses and taverns to relieve their feelings with oaths over a mug. The air was electric--and cause enough. Many speculators or their agents had been scouring the back country of the Carolinas and Georgia for months buying up State securities on the assumption that they would be funded. They had bet on a sure thing--and lost.

For a moment the friends of Assumption appeared to lose interest in the new Government. Some acted as though the experiment launched by the Constitution had failed and was not worth a ceremonious burial. The interest of Congress lagged, and in the Senate, where the Assumptionists were strongest, business was practically abandoned. In less than an hour after it was called to order, Rufus King would move an adjournment.[263] It was a gloomy and cold April--the distant hills and even the house-tops covered with snow.[264] ‘The Eastern members talk a strange language,’ wrote Madison to Monroe. ‘They avow, some of them at least, a determination to oppose all provisions for the public debt which does not include this, and intimate danger to the Union from a failure to assume.’[265] Senator Johnson of North Carolina found ‘the gentlemen who are in favor of assumption ... very sore and impatient under their defeat.’[266] Not a few of the Federalists began to speak and write pessimistically of the doubtful value of the Government. From his library at Beverly, George Cabot could see the danger of ‘division, anarchy and wretchedness,’[267] and if the States seized the opportunity to ‘provide honestly for their creditors ... the general government would be ruined irrevocably.’ But the thing that pained Cabot most was the attitude of Madison. Had he changed his principles?[268]

In the Hamiltonian press the comments were funereal. Fenno’s paper teemed with indignant protests and savage attacks on the State ‘demagogues’ who were ‘hankering after popularity at home.’[269] ‘Americanus,’ paying tribute to Hamilton and his funding plan, found it ‘wantonly destroyed’ and ‘in broken pieces at the several shrines of ambition, avarice and vanity.’[270]

Yet all the scribes were not similarly depressed. A writer in the ‘New York Journal,’ describing the birth and death of Assumption, worked the advocates of the measure into a frenzy. He pictured it as ‘the bastard of Eastern speculators who have lost their puritanic manners’--the ‘brat’ having been brought into the world ‘by the dexterous application of the forceps.’ Thus it was injured by the ‘violence of the delivery,’ but ‘Dr. Slop’ had hoped to save it by having it bathed ‘in Yankee rum.’ ‘The unfortunate child was presented to the baptismal font by Granny Fitzsimmons; and Mr. Sedgwick, who is gifted with canting talents, officiated as priest, baptized the infant, and his name stands on the parish books as Al--ex--der Assumption.’ But alas, ‘the child of promise who would have redeemed the Eastern States from poverty and despair is now no more.’[271]

But Hamilton was not despairing--he had just begun to fight.

It was under these conditions that an event of tremendous import occurred. On Sunday a stage-coach lumbered up to the tavern on Broadway, and a tall, travel-worn man emerged and entered the hostelry. Momentous as was the meaning of his arrival, it claimed but scant notice in the papers of the city.

‘On Sunday last, arrived in this city, Thomas Jefferson, Esq., Secretary of State for the United States of America.’[272]

There is nothing in the press or the correspondence of the time to indicate the slightest appreciation of the significance of this accession to governmental circles. No doubt Madison was among the first to greet him, but of this we have no evidence. For two weeks Jefferson had been upon the road from Richmond, resting a day at Alexandria where an eighteen-inch snow caused him to send his carriage on by water and take the public stage. The roads were wretched and there was little opportunity for restful sleep. Occasionally the long-legged traveler left the stage to mount his horse for exercise. Thus he rode to the field of battle.

As Hamilton surveyed the wreckage of the field, he saw an opportunity. There was another bitter battle pending over the selection of the site of the permanent capital. Might he not bargain a bit and trade enough votes for Assumption? The site of the capital was a matter of indifference to him. No sentimental ties bound him to any State or community. No dust sacred to him rested anywhere in American soil. He was ready to go with any group that could contribute enough votes to make Assumption sure. Philadelphia--New York--the Susquehanna--Baltimore--the Potomac--a mere bagatelle to him. In the fact that it was more than that to others he saw his chance. Could the Virginians or the Marylanders who had opposed Assumption pay him in votes for a capital at Georgetown, or even Baltimore? Could Robert Morris whip the stubborn Pennsylvanians into line for a capital in Philadelphia or on the Susquehanna? True, Washington favored Georgetown, but that meant nothing to Hamilton if Georgetown could not bring Assumption. It is a myth of history that he was tenderly considerate of the wishes of his chief: the facts to sustain it do not appear. Far more important to him was the fact that Madison and Carroll favored Georgetown. They had votes.

The intense bitterness over the struggle called for infinite diplomacy and sagacity in negotiation. The papers of the country were filled with ill-natured letters on the fight which was no more in evidence in Congress than in the bar-rooms of the competing cities. Ames, like Hamilton, cared little about the site if he could but get Assumption, and was disgusted with the ‘despicable grogshop contest, whether the taverns in New York or Philadelphia shall get the custom of Congress.’ Sedgwick had become a ‘perfect slave to the business,’ and ‘Goodhue frowned all day long and swears as much as a good Christian can....’[273]

By early June the bargaining stage had been reached. One day Tench Coxe, of the Treasury, and Jackson, one of Washington’s secretaries, called at the lodgings of Fitzsimons and Clymer with the bald proposition to trade the permanent residence to Philadelphia for enough Pennsylvania votes to pass Assumption. Taking this as a hint from Hamilton, Robert Morris wrote him that early the next morning he should be taking a walk on the Battery, and if any propositions were open he would be very glad to have the Secretary of the Treasury join him in his constitutional. Thus, long before many of the statesmen had enjoyed their coffee, Hamilton and Morris paced up and down at the deserted Battery. With Walpolean directness, Hamilton went to the point. He needed one vote in the Senate and five in the House. If Morris could assure him these, he could give assurance, in return, that the permanent residence would be given to Germantown or the Falls of the Delaware. Morris promised to consult his colleagues--but how about the temporary residence for Philadelphia? After thinking it over, Hamilton sent word that he would not think of bargaining on the temporary residence.[274] For several days these negotiations continued. The Pennsylvanians moved with a deliberation that tried Hamilton’s patience. A few days later he threatened his Philadelphia friends with the possibility of the New-Englanders going to Baltimore or the Potomac.[275]

Meanwhile, Hamilton had been thinking seriously of Jefferson. They met as strangers, knowing one another well by reputation. Their feelings were friendly. There were innumerable reasons why they should ultimately fly at each other’s throats, but that was in the future. One June day they met at the presidential mansion on Broadway, and, leaving at the same time, Hamilton saw his opportunity.

There was a picture for an artist to paint--Hamilton and Jefferson, arm in arm, walking along Broadway discussing the possibilities of a bargain. With all the persuasiveness of his eloquence, Hamilton dwelt on the very real danger of disunion if Assumption failed. With subtle diplomacy he seemed to throw himself trustfully on Jefferson’s mercy. A great struggle for independence--a promising young nation--and was all to be lost? The South wanted the capital, the North wanted Assumption--could there not be a common meeting-ground? Jefferson would see.

A dinner at Jefferson’s table in the house on Broadway. Men from the South about the board. The topic--the pending bargain. A little later, Hamilton was informed that an agreement could be reached. The word was passed along the line. Even Madison satisfied himself that, since Assumption could not be prevented, the bargain might as well be made--but if there had been no bargain there would have been no Assumption. A few nights later the Pennsylvania delegation entertained both Hamilton and Jefferson at dinner. The latter impressed one guest with his ‘dignity of presence and gravity,’ Hamilton with his ‘boyish giddy manner.’ Whatever may have been the cause of the gravity of Jefferson, there was reason for the giddiness of Hamilton--he had won![276]

XII

The attempt of Jefferson in later life to explain his part in the bargain over Assumption, with the assertion that he had been deceived by Hamilton, is in the nature of an alibi created after the crime. He was not a simple-minded rustic, and his correspondence previous to the bargain shows that he had given serious consideration to Assumption. He had been in daily contact with Madison who had led the fight against it. A meticulously careful student of the press, he unquestionably was familiar with every objection to Assumption and funding which he afterward offered. He had undoubtedly read Madison’s argument which had been published a month after he reached New York. As late as June 20th, he was writing Monroe that, unless the quarrel over Assumption and the residence was settled, ‘there will be no funding bill agreed to, our credit will burst and vanish, and the States separate, to take care, every one of itself.’ Much as he would prefer that the States pay their own debts, he could see ‘the necessity of yielding to the cries of the creditors ... for the sake of the Union, and to save it from the greatest of all calamities, the total extinction of our credit in Europe.’[277] Here was justification enough for his action without resorting to the fanciful story of his deception by Hamilton. ‘The question of assuming the State debts has created greater animosities than I ever yet saw,’ he wrote Dr. Gilmer a week after his letter to Monroe.[278] Thus he knew precisely how the lines were drawn. Perhaps he did not appreciate at the moment the political advantage of appearing on the side of the opposition,--but he was not deceived. Nor was Madison imposed upon. He accepted the bargain because ‘the crisis demands the spirit of accommodation,’ albeit he wished it ‘considered as an unavoidable evil and possibly not the worse side of the dilemma.’[279]

With many, however, the triumph of Assumption meant placing Hamilton and his followers in an impregnable position; this, too, was the idea of the Hamiltonians and great was their rejoicing. When the measure passed the Senate, members of the lower House were packed behind the iron railing, the smiling faces of Ames and Sedgwick conspicuous among them. To the extremists in the opposition it seemed the end. ‘I do not see that I can do any good here and I think I had better go home,’ wrote Maclay. ‘Everything, even to the naming of a committee is prearranged by Hamilton and his group of speculators.’[280] And the Hamiltonians, who had raged over the satirical article on the birth of Assumption, made merry over a verse in Fenno’s journal:

‘The wit who bastardized thy name And croaked a funeral dirge Knew not how spotless was thy fame How soon thou would’st emerge.’[281]

When Congress adjourned, Hamilton, rejoicing in his triumphs, turned gayly to the next step in his programme, with more powerful influences behind him than he had ever had before.