Alexander Hamilton (72 page)

Hamilton summoned Reynolds to his office that afternoon. He did not know whether Reynolds had proof of the affair or was bluffing, so he played it cagey. He later wrote that he neither admitted nor denied the affair, telling Reynolds “that if he knew of any injury I had done him, entitling him to satisfaction, it lay with him to name it....It was easy to understand that he wanted money and to prevent an explosion, I resolved to gratify him....He withdrew with a promise of compliance.”
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Hamilton was a rank amateur in adultery. By allowing James Reynolds to be seen in his office, he had given the blackmailer the upper hand.

On Saturday evening, December 17, James Reynolds wrote to Hamilton and charged him with alienating Maria’s affections: “I find the wife always weeping and praying that I wont leve her. And its all on your account, for if you had not seekd for her Ruin it would not have happined.”
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Reynolds demanded some compensation for his ruined marriage and arranged to meet with Hamilton the next day. Hamilton was so alarmed that he sent a note to an unnamed correspondent stating, “I am this moment going to a rendezvous which I suspect may involve a most serious plot against me....As any disastrous event might interest my fame, I drop you this line that from my impressions may be inferred the truth of the matter.”
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At their meeting, Reynolds was very businesslike, and Hamilton asked him to name his price. The day after, Reynolds said that one thousand dollars would be a proper salve to his “wounded honor.”
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He contended that he could never regain his wife’s love and that he planned to leave town with their daughter. Hamilton was forced to pay the now considerable blackmail money in installments, making one payment on December 22 and a second on January 3. James Reynolds, if poor at spelling, was able to fathom Hamilton’s insatiable sexual appetite for his wife and his dread of exposure.

At this point, Hamilton tried to terminate the shabby affair, which formed such an odd counterpoint to the splendor of his public life. Briefly, he ceased all contact with Maria. This frightened James Reynolds, who saw future income fast fading away. On January 17, 1792, he wrote to Hamilton and urged him to visit the house and regard his wife as a “friend.” Suddenly, he was no longer the wronged spouse but a philanthropist concerned with his wife’s welfare, not a grief-stricken husband but a shameless pimp for his wife. It is hard to believe that at this juncture Hamilton did not abruptly end this hazardous affair. Of Reynolds’s invitation, Hamilton wrote: “If I recollect rightly, I did not immediately accept the invitation, nor till after I had received several very importunate letters from Mrs. Reynolds.” Subsequent letters from husband and wife were “a persevering scheme to spare no pains to levy contributions upon my passions on the one hand and upon my apprehensions of discovery on the other.”
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Even as Hamilton had indulged his lust for Maria Reynolds, his imagination was conjuring up a futuristic industrial city, a microcosm of the manufacturing society that he envisioned to counter Jefferson’s nation of citizen-farmers. At a time when nineteen of twenty Americans tilled the soil, Hamilton feared that if America remained purely agrarian, it would be relegated to eternally subordinate status vis-àvis European societies.

It was already an age of scientific wonders that promised to reshape economies and boost productivity. From the first steam engine that James Watt built in Great Britain in the 1760s to the hot-air balloons that floated across French skies in the 1780s to Eli Whitney’s invention of the cotton gin and the use of interchangeable parts in the 1790s, it was a time of technological marvels. No industry was being transformed more dramatically than British textiles. Sir Richard Arkwright had devised a machine called the water frame that used the power of rushing water to spin many threads simultaneously. By the time Hamilton was sworn in as treasury secretary, Arkwright’s mills on the Clyde in Scotland employed more than 1,300 hands.

As much as the Bank of England, the British Exchequer, and the Royal Navy, these industrial breakthroughs had catapulted Britain to a leading position in the world economy. The British treated such economic discoveries as precious state secrets, which they guarded jealously against rival nations. Laws were passed to outlaw the export of textile machinery, and ships were stopped midocean if they contained such contraband cargo. Skilled mechanics who worked in textile factories were forbidden to emigrate upon pain of fine and imprisonment—for even if they couldn’t smuggle out blueprints, they could memorize methods and peddle this valuable information abroad. All of this Hamilton watched with rapt fascination. “Certainly no other man in America saw so clearly the significance of the change that was taking place in English industrialism,” Vernon Parrington wrote of Hamilton, “and what tremendous reservoirs of wealth the new order laid open to the country that tapped them.”
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The treasury secretary intuited that the future strength of nation-states would be proportionate to their industrial prowess, and he celebrated the early growth of American industry, whether it was entrepreneurs making wool hats or glass in Pennsylvania or watchmakers in Connecticut.

Contrary to his image as a tool of England, Hamilton enlisted early on in a scheme to challenge British supremacy in textiles. In January 1789, excited investors crowded into Rawson’s Tavern on Wall Street to feast on wine and cake and consecrate the New York Manufacturing Society. Two months later, Hamilton’s name appeared among charter subscribers investing in a new woolen factory scheduled to open on Crown Street (later Liberty Street) in lower Manhattan. In the end, the facility suffered from a fatal shortage of water power and closed a year or two later, but the experience initiated Hamilton into the mysteries of the new industrial order.

Around this time, a young man named Samuel Slater slipped through the tight protective net thrown by British authorities around their textile business. As a former apprentice to Sir Richard Arkwright, Slater had sworn that he would never reveal his boss’s trade secrets. Flouting this pledge, he sailed to New York and made contact with Moses Brown, a Rhode Island Quaker. Under Slater’s supervision, Brown financed a spinning mill in Rhode Island that replicated Arkwright’s mill. Hamilton received detailed reports of this triumph, and pretty soon milldams proliferated on New England’s rivers. With patriotic pride, Brown predicted to Hamilton that “mills and machines may be erected in different places, in one year, to make all the cotton yarn that may be wanted in the United States.”
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Hamilton’s policies were consistent with the drive for autarky and trade on equal terms with England that had fired the American Revolution in the first place. The colonists had rebelled against an imperial system that restricted their manufactures and forced them to hawk their raw materials to the mother country, stifling their economic potential. Before the Revolution, England had imposed a law banning the export to America of any tools that might assist in the manufacture of cotton, linen, wool, and silk. The British manufacturers of hats, nails, steel, and gunpowder had impeded American efforts to make comparable articles. It was Hamilton’s vision of America as a manufacturing behemoth, not Jefferson’s of a society of yeomen farmers, that threatened the British.

The shape of Hamilton’s future industrial policy was foreshadowed in May 1790 when Tench Coxe replaced William Duer as assistant treasury secretary. The move possessed vast symbolic meaning, for Coxe was a well-known advocate of manufacturing and eager to raid Britain’s industrial secrets. That February, he had written a long letter to Hamilton, praising America’s maiden efforts at industry but citing a shortage of both capitalists and large-scale capital as retarding the introduction of labor-saving machinery. He regretted that because of Britain’s pugnacious defense of her technological superiority in textiles the United States was not “yet in full possession of workmen, machines and secrets in the useful arts.”
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Hamilton and Coxe teamed up in a daring assault on British industrial secrets. Coxe decided that the best way to achieve industrial parity with England was to woo knowledgeable British textile managers to America, even if this meant defying English law. Right before joining Treasury, he posted a man named Andrew Mitchell to England to snoop around factories and surreptitiously make models of textile machinery. Additionally, on January 11, 1790, Coxe had signed an agreement with a British weaver, George Parkinson, who also had studied at Arkwright’s feet and bragged openly that he “possessed . . . the knowledge of all the secret movements used in Sir Richard Arkwright’s patent[ed] machine.”
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In exchange for passage to Philadelphia, Parkinson agreed to provide Coxe with a working model of a flax mill that incorporated Arkwright’s designs. On March 24, 1791, the U.S. government granted patents for Parkinson’s flax mill, even though he had admitted that they were “improvements upon the mill or machinery . . . in Great Britain.”
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Clearly, the U.S. government condoned something that, in modern phraseology, could be termed industrial espionage. Building upon this precedent, Hamilton put the full authority of the Treasury behind the piracy of British trade secrets.

By April 1791, Hamilton had lent his prestige to Coxe’s plan for a manufacturing society operated by private interests that would enjoy the general blessings of government. It would be a pilot project, a laboratory for innovation. The Society for Establishing Useful Manufactures (SEUM) was lauded by a later historian as “the most ambitious industrial experiment in early American history.”
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It was almost certainly Hamilton, with an assist from Coxe, who wrote the eloquent prospectus for the society that appeared on April 29. He left no doubt as to how he envisaged America’s future, writing that “both theory and experiences conspire to prove that a nation . . . cannot possess much
active
wealth but as a result of extensive manufactures.”
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The society intended to create more than a single mill. It projected an entire manufacturing
town,
with investors profiting from the factory’s products and the appreciation of the underlying real estate. The prospectus listed a cornucopia of goods—including paper, sailcloth, cottons and linens, women’s shoes, thread, worsted stockings, hats, ribbons, blankets, carpets, and beer—that the society might manufacture. Hamilton hoped that through the “spirit of imitation,” the society would spawn comparable domestic businesses.
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Thus far, the major hindrance to such enterprise had been “slender resources,” but lack of capital had now been remedied by the government’s funded debt. Once again, Hamilton used one program to advance the fortunes of another in an ever expanding web of economic activity. The society needed five hundred thousand dollars in seed capital, and the prospectus pointed out that it could be paid for partly in government bonds, promoting public debt and the industrial city at one stroke. “Here is the resource which has been hitherto wanted,” Hamilton boasted.
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That Hamilton was prepared to ransack European industrial secrets was made plain when the prospectus said that “means ought to be taken to procure from Europe skilful workmen and such machines and implements as cannot be had here in sufficient perfection.”
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Hamilton did not lend his prestige to the scheme from afar. In July 1791—the same month investors gobbled up bank scrip and he began his dalliance with Maria Reynolds—he traveled to New York to drum up support for the society’s first stock offering, which sold out instantly. He then attended the subscribers’ inaugural meeting in New Brunswick, New Jersey, in August. In choosing directors later that year, Hamilton blundered by turning to his freewheeling companion, the speculator William Duer. He packed the board with local financiers—seven directors from New York, six from New Jersey—instead of striving for broad geographic representation. The board was also excessively crammed with financiers when men with industrial credentials were sorely needed.

Early on, Hamilton and Coxe settled on New Jersey as the optimal place for this venture. The state was densely populated, possessed cheap land and abundant forests, and enjoyed easy access to New York money. Most critically, it was well watered by rivers that could spin turbine blades and waterwheels. That August, Hamilton dispatched scouts to investigate these waterways. He and other society members were swamped with appeals from local landlords, touting the wonders of their riverside properties. It was later on concluded, largely at Duer’s insistence, that the Great Falls of the Passaic in northern New Jersey offered “one of the finest situations in the world.”
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Hamilton knew the secluded spot well. One day during the Revolution, he, Washington, and Lafayette had picnicked by the falls, enjoying a “modest repast” of cold ham, tongue, and biscuits in a sylvan setting that momentarily banished thoughts of war. The Great Falls mark a scenic bend in the Passaic River, the foaming water—up to two billion gallons per day—plunging seventy feet into a deep, narrow gorge of brownish-black basalt, blowing a rainbow-forming spray into the air. The society decided to call the new town Paterson to flatter Governor William Paterson. On November 22, 1791, the governor returned the favor, granting the society a charter (likely written by Hamilton) that gave it monopoly status and a tenyear tax exemption. The society bought seven hundred acres and carved it up into parcels, not just for factories but for a brand-new town—one that became the third largest city in New Jersey.

Incredibly, Hamilton, with his ever growing roster of projects, personally recruited supervisors for the first cotton spinning mill. This glorified adviser hired as foreman the same George Parkinson who had plundered British secrets for flaxspinning machinery; the Treasury subsidized Parkinson’s living expenses. In July, Hamilton had received an extraordinary letter from another renegade employee of Sir Richard Arkwright, Thomas Marshall, who also came to America armed with British textile secrets. Having been superintendent at Arkwright’s huge Derbyshire mill, he bragged to Hamilton that he had toured the mill again on a reconnaissance mission the previous fall: “I was all over his works and am consequently fully acquainted with every modern improvement.” Marshall had no misgivings about snatching English mechanics for the society’s projects and suggested that a “master of his business in the weaving branch and in possession of all or most of the fashionable patterns now worn in England will be very useful.”
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That August, Hamilton negotiated contract after contract with British textile refugees, including William Hall, who had learned to stain and bleach fabrics, and William Pearce, who had erected a Yorkshire cotton mill. That December, when the society’s board met to consider personnel for the new operation, it rubber-stamped all of Hamilton’s choices.