Jefferson and Hamilton (35 page)

Hamilton won few friends by aiding those who had opposed the American
Revolution, but given his distinguished war record, he had no worries that he would be considered a closet Tory. He took on scores of cases, and toward the end of the decade, when he was again a member of the state assembly, Hamilton was instrumental in securing the repeal of all legislation that discriminated against the Loyalists.

The anti-Tory maliciousness left a stamp on Hamilton’s thinking. He saw the popular vindictiveness as a foretaste of what could be expected should the United States become a democracy. In “times of heat and violence,” he warned, there was always a tendency “to gratify momentary passions” with steps that “afterwards prove fatal to themselves.” Furthermore, there was an ever-present danger that demagogues would both whip up hysteria—“corrupt the principles” of the people, was how he put it—and seek to capitalize on it. The governor of New York, George Clinton, was doing just that by playing on anti-Tory passions, Hamilton concluded. Hamilton had once admired Clinton, who had served as a brigadier general during the war. Back in 1782, Hamilton had called him “a man of integrity” and “a statesman.” Now, however, he thought Clinton, who was in the midst of six three-year terms as the state’s chief executive, was the quintessential demagogue, a “designing” man out to seize on “a prevailing prejudice” for his personal gain.
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The best defense against demagoguery and unrestrained popular passion, Hamilton said in two lengthy essays in 1784, was to embody Enlightenment rationalism, or what he called the “spirit of Whiggism,” in American laws. This “generous, humane, beneficent and just” spirit, he added, should be sanctified in a “regular and constitutional mode.” His first objective was the rule of law, but he also hoped to maintain a connection with the past. He wished for a legal code that would embody the “customs of all civilized nations” and that “cherishes legal liberty, holds the rights of every individual sacred, condemns or punishes no man without regular trial and conviction … [and] reprobates equally the punishment of the citizen by arbitrary acts of legislature.”
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Jefferson would have agreed with Hamilton—to a point. He too might have been shocked by the retributive tenor of the anti-Tory legislation. However, whereas Hamilton responded with obeisance toward the law and tradition, Jefferson urged liberation from the dead hand of the past. Hamilton cherished the past as a weapon against radical innovation. Not for nothing did Hamilton tell a friend that he sought to “erect a temple to time.”
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Banking also occupied some of Hamilton’s time in the 1780s. He had urged a national bank as early as 1780, and he believed one had been created when Congress chartered Robert Morris’s Bank of North America two years later. Hamilton and Morris had seen the bank as a means of stabilizing society. Both were convinced that a national bank would not only strengthen the
Union through “one general money connexion,” but—as Morris had said—would also “indissolubly … attach many powerful individuals to the cause of our country by the strong principle of self-love and the immediate sense of private interest.”
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However, the Bank of North America was undercapitalized and never became much more than a Pennsylvania bank headquartered in Philadelphia.

In the absence of a true national bank, Hamilton played an active role in the establishment of the Bank of New York in 1784. He served as its legal counsel, drafted its charter for approval by the state, and sat on its board of directors. He saw the bank’s potential as a provider of seed money for merchants and entrepreneurs, and he envisaged it as the sole source of sound currency in the state. On the latter score, Hamilton’s aspirations were not met, and in mid-decade the state turned to issuing paper currency and, as a hedge against inflation, it levied increased taxes on the wealthy. The episode was not unimportant for Hamilton. The city’s merchants became more aware of him. For his part, Hamilton became fully conscious of their seething impatience with shaky public credit and what they saw as the state’s unsound money policies.
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In what must have been nearly record time for a newly minted attorney, Hamilton’s earnings enabled his family to live comfortably. After only a year in practice, he purchased for £2,100 in cash the Wall Street house he had been renting.
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Nor was he the only one who was thriving. For many, the 1780s was a very good decade. Newspapers were filled with poems and essays describing the United States as a “blest land” with a bright future. There appeared to be opportunities at every turn. Thousands crossed the Appalachians into what is now Kentucky and Ohio, eager to gain their own farms. Thousands of Loyalists had fled into exile, forfeiting their lands and businesses, and creating vacancies in the public and professional offices they had held. Before leaving to join her husband in Europe in 1784, Abigail Adams had remarked that every man in Boston who wanted a job could find one. Benjamin Franklin returned home the following year and proclaimed that he “never saw greater and more indubitable marks of Public Prosperity in any Country.” He, too, thought that “Working people have plenty of employ and high pay for their labour,” and he added that farmers were also prospering. Similarly, Washington’s letters to acquaintances in Europe painted a picture of a bustling America in which roads and bridges were under construction, rivers were being improved, and farms that had suffered during the war were back in operation. Jefferson concurred, observing in 1784 that his countrymen were “enjoying all the happiness which easy government, order and industry
are capable of giving to a people.” Emigrants poured in, some twenty thousand annually to Pennsylvania alone. With the war at long last over, the future indeed looked bright.
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Yet, troubles existed. Commerce suffered during and after the war. Britain’s decision to keep its ports closed to American exports was a punishing blow. So were the heavy taxes levied to retire state and national debts that were incurred from raising and supplying armies, and from borrowing, including foreign loans, chiefly those made by France. In 1784, the national government, needing almost one million dollars annually to service its debts, billed the states for nearly three-quarters of a million dollars. The following year it requested three million dollars from the states and stipulated that one-third was to be paid in hard money, that is, gold or silver.

Much of postwar taxation was for compensating bondholders who owned public securities, essentially the promissory notes issued during the war as IOUs to army contractors and soldiers. Because money was largely worthless after 1778, few original holders of the notes owned them any longer. Along the way, nearly all the securities had been bought up by speculators drawn almost exclusively from among the wealthiest in society. Within a few years of the end of the war, only 2 percent of Americans owned bonds. Sixteen “stockjobbers,” as the speculators were often derogatorily called, owned half of Rhode Island’s bonds. In Pennsylvania, a dozen “monopolizers,” as the speculators were also sometimes labeled, held nearly 70 percent of that state’s bonds.
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Taxes provoke disgruntlement, and paying taxes to compensate some of the most affluent individuals in the land, few of whom had ever shouldered a weapon or been in harm’s way during the war, aroused a rancor in some quarters that nearly matched the burning anti-British indignation of the war years.

The economy was not the only concern. When General Washington spoke of the “present Crisis” six months before he left the army, he was in part thinking about the new nation’s military weakness.
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He worried that the United States existed in a world filled with predatory, anti-republican, monarchical powers. Washington was equally troubled by the situation in the trans-Appalachia. Indians living beyond the mountains viewed the sudden flood of settlers as an invasion of their homeland. The Indians, moreover, were being armed by the British from Canada and western forts on American soil. According to the Treaty of Paris, the British were to relinquish those forts. But London declared that its army would not abandon those installations until the United States settled its prewar debts with British creditors, which the peace accord also required. The United States was powerless to cope. Unable to raise revenue, it could neither resolve the debt issue nor the lurking dangers in the Ohio Country.

Yet another western problem begged for a solution. The western boundary of the United States was the Mississippi River, but the peace treaty made no mention of the southern boundary. The United States claimed the 31st parallel as its southern boundary. Spain, to whom Great Britain had returned East and West Florida, claimed the 32nd parallel as the Spanish-American boundary. Following the war, Madrid closed the Mississippi River to American commerce within what it claimed as Spanish territory, roughly the one hundred miles from Natchez to the Gulf of Mexico, including New Orleans. The feeble United States was without leverage to compel Spain to open the Mississippi, a vital artery at a time when most goods moved by water.

When Washington had spoken of a crisis, he was alluding to the western threats, where “the flanks and rear of the United States are possessed by other powers.” He knew the settlers wanted not only security against the Indians, but also, in order to become prosperous commercial farmers, the ability to ship their commodities to eastern and foreign markets through New Orleans. He also understood that the “Western settlers … stand as it were upon a pivot—the touch of a feather, would turn them any way.”
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Washington was alluding to the danger of western secession, for he understood that Great Britain and Spain might offer concessions to the western settlers in return for their agreement to leave the United States. Should that occur, all hope would be dashed of a united America becoming a safe, strong land of opportunity.

When independence was declared, Americans dreamed of the fruitful commerce that would come from breaking the shackles of colonialism. The dream had not been realized. Britain and Spain largely closed their ports to American ships, and neither Franklin nor Jefferson had enjoyed much success in expanding trade with France.

John Jay, the Secretary of Foreign Affairs, sought to resolve America’s difficulties with Spain through diplomacy, but his discussions with Madrid only revealed the depth of the problem. In the spring of 1786, after a year of negotiation, the secretary told Congress that Madrid was ready to sign what would be called the Jay-Gardoqui Treaty. Spain, Jay said, would open its ports to American commerce, but on the condition that the United States would renounce navigation of the Mississippi River for decades. The opening of the ports would be a bonanza for the trade-starved northern maritime states, and every one of them supported ratification. But the five southern states were opposed. They looked on what is now the southeastern United States as their territory—and in fact the southern states of Kentucky, Tennessee, Alabama, and Mississippi would ultimately be carved out of the region. But if the treaty were ratified, settlers would shun the region, for if goods could not be gotten to market, the inhabitants were destined to be dirt-poor farmers. The
treaty failed only because the northern majority in Congress fell one vote short of the two-thirds majority needed to sanction the pact. Many Southerners and Westerners were outraged at the North’s willingness to sell out their interests, and many Southerners saw themselves as a lonely minority in a Union in which the balance of power lay with the northern states. Those northern states, meanwhile, simmered with anger at the loss of a badly needed commercial opportunity.
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The exuberant pride in the new American nation that had been so manifest in 1776, and which had led many men to bear arms, was waning. Growing numbers of Northerners and Southerners were embarrassed by a Congress so enervated that it often could not meet for a lack of a quorum, and when it did meet seemed to overflow with mediocrities. A widespread feeling set in that few “men of enlarged minds” any longer wished to serve in a body that was too weak to “coin a copper,” as one observer put it.
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“No Morn ever dawned more favourable than ours did—and no day was ever more clouded than the present,” Washington declared in 1786. The “scurge” of feebleness was “shameful & disgusting,” he continued, and in more than one letter he reiterated what he had said before leaving the army: “a tone” must be given “to our Federal Government, as will enable it to answer” national interests. What Washington had labeled the “present Crisis” in 1783, he was calling “the impending storm” by 1786, and he gloomily predicted that if changes were not forthcoming, the “superstructure we have been seven years, raising at the expence of much blood and treasure” was doomed.
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Concern over America’s debility, and its nearly feckless national government, was not misplaced. But some in the newly independent United States were alarmed for reasons having nothing to do with the West, or commerce, or national pride. Long before independence, Joseph Galloway, a conservative Pennsylvanian who later turned Tory, warned Congress that a break with the mother country would unleash democracy and social disorder. America, he predicted, would be victimized by “companies of armed, but undisciplined men … traveling over your estates, entering your houses … seizing your property, and carrying havock and devastation wherever they head—ravishing your wives and daughters.”
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Galloway’s anxiety was exaggerated, but substantive political and social changes accompanied independence, just as he had forecast. Beginning in 1776, several state constitutions broadened suffrage rights, provided for more elective offices and more frequent elections, reduced the property qualifications for holding office, and corrected malapportionment in their assemblies. Men who had never before held political office ascended to positions of
authority, and in New York a substantial portion of the colonial ruling elite—the Hudson River squirearchy, which included Hamilton’s in-laws—lost much of their pre-Revolution authority to men like Governor Clinton, who rode to power with the backing of small farmers from upstate. What was happening in New York was occurring elsewhere. For instance, before the Revolution, New Hampshire’s assembly consisted almost entirely of wealthy gentlemen from the eastern coastal region; by the mid-1780s most assemblymen were ordinary farmers, and a considerable percentage came from the western regions of the state.
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A sense of egalitarianism also took hold. It grew among small farmers and the propertyless, who were being asked to soldier, and die, for the United States, but it was inspired as well by the noble ideas of equality expressed in Jefferson’s Declaration of Independence.