The Fact that Hamilton shaped and guided the Administrations of
Washington and John Adams at the Time generally believed, now
clearly established--Occasions when his Influence did not
prevail--His Views and Purposes on entering the Cabinet--Some of
his early Measures not authorized by the Constitution--True
Character of that Instrument--Hamilton as Secretary of the
Treasury--His extraordinary Ability--His exaggerated Ideas as to
the Embarrassments of the Country--Unfounded Alarm at that Period
on the Subjects of the Public Debt and Public Revenues--Device for
surmounting Constitutional Obstacles to Hamilton's Plan--Source of
the Doctrine of Implied Powers--Foundation of Hamilton's Policy
under his Construction of the Constitution--His Measures and the
Effects he anticipated from them--The Funding System--The Weakening
of State Authority a leading Feature of Hamilton's Policy--Further
Aims and other "Stages of Improvement"--Hamilton's Report on
Manufactures; its Ability, Spirit, and Political Effects upon its
Author and his Party--Hamilton's Desire to build up in this Country
a "Money Power" similar to that of England--Such a Power
antagonistic to the Democratic Spirit of our People--The Real
Object of Hamilton in endeavoring to transplant the System
here--His temporary Success, and the Influence thereof in forming a
School that survived him--His Motives and the Convictions upon
which they were Founded.
That the policy of every administration of the Federal Government for
the first twelve years of its existence was shaped, and the action of
the Federal party guided, by the opinions and advice of Hamilton, was
the general impression of the opponents of that party, and of course
known to the leading Federalists. I have in another place[17] referred
to the fact that Mr. Jefferson, in all my conversations with him in
1824, when he spoke of the course pursued by the Federal party,
invariably personified it by saying "Hamilton" did or insisted thus;
and, on the other hand, "the Republicans" held or claimed so and so; and
that upon my calling his attention to the peculiarity of his expression,
he smiled and attributed his habit to the universal conviction of the
Republicans that Hamilton directed every thing. But the evidence they
possessed of the truth of that impression was slight indeed in
comparison with that which is now before the country. They had only the
opinions given in the cabinet upon the important public questions that
arose during that period, with the decisions of the President upon them
and other public documents relating to them, and the general conjectural
impressions on the minds of politicians, which can seldom be traced to
any specific authority, in respect to the influence which governs the
action of parties. The additions now made by the publication of
Hamilton's private papers alone, and more especially when they are read
in connection with those of other distinguished public men, prove those
impressions to have been well founded, and to an extent far beyond what
was even imagined in those days. I had read these papers with care, and,
I hope, weighed their contents with candor, before I gave my assent to
the declaration of Mr. Charles F. Adams upon the subject, quoted on
p. 96 above. Many of General Washington's letters to Hamilton are
marked "private," and some "private and confidential." It is not for me
to decide upon the propriety of their publication, however much I may
regret that the friends of the latter should have deemed that course
necessary in respect to many of them. I content myself with a general
reference to those which have a bearing upon the point under
consideration, without making extracts or adding remarks explanatory of
their tendency and effect. The letters between Washington and Hamilton
more particularly in point will be found in the fifth volume of
Hamilton's "Works," p. 106, in answer to letter at p. 12; and in the
sixth volume, at pp. 19, 34, 35, 36, 52, 63, 64, 73, 90, 143, 156, 179,
197; those between Hamilton and members of Washington's cabinet, in the
sixth volume, at pp. 29, 41, 67, 129, 238.
[17] See note, p. 9.
The steps taken by General Hamilton to shape the policy and to prescribe
the action of Mr. Adams's administration were designed to embrace its
entire course, and were carried into effect with but little respect for
the wishes or opinions of its constitutional head. Three weeks had not
elapsed after Mr. Adams's inauguration before General Hamilton wrote a
letter to Mr. Pickering, Secretary of State, in which he expressed "his
extreme anxiety that an exactly proper course should be pursued in
regard to France," and suggested for his consideration, under seven
different heads, what he thought that course ought to be. The Secretary
was not requested to submit these views to the President, nor was any
desire indicated that he should do so, nor any notice taken of the
President in the letter further than may be found in the closing
paragraph,--"The executive, before Congress meet, ought to have a
_well-digested plan_ and _coöperate_ in getting it adopted."
If there was a single instance in which Hamilton, in his numerous
letters of advice to the Secretaries, requested them to submit his views
to the consideration of the President, it has escaped my observation. He
was several times spoken of, but generally as to what he ought to do and
what he might or might not be induced to do. The letters and papers
bearing upon the subject will be found in the sixth volume of Hamilton's
"Works," at pp. 213, 215, 218, 246, 250, 251, 252, 269, 278, 292, 294,
381, 444, 447, 471, 477, 484.
During the whole period Hamilton was regarded as the leader of the
Federal party by most of the prominent members of that party,--Mr. Adams
and a few of his friends excepted,--by those who represented the country
abroad, by members of Congress, &c., &c. He was considered the fountain
head of partisan authority, was freely applied to for advice, and gave
it when it was asked, and quite as freely when it was not. He from time
to time furnished members of Congress with specifications of steps
proper to be taken, in one of which will be found suggested the passage
of the celebrated sedition law. A few instances of his interference in
this form will be found in Volume V. Hamilton's "Works," pp. 79, 86, and
in Volume VI. at pp. 92, 94, 381, 383, 390.
The most important, if not the only occasions on which the influence of
Hamilton over the action of the Federal party was exerted without
success, were those of the formation of the Federal Constitution, and
the support of Aaron Burr, by that party, for President, and for
Governor of New York in 1801 and 1804. The first can scarcely be
regarded, however, as such an occasion, because it was one in which
party distinctions were merged in a compromise to which he himself
ultimately assented. The others belong to the number of those occasions
which, from time to time, present themselves in the history of all
political parties, when the lust of power overrides the advice of their
ablest and best friends. A party which has been long out of power, or
which, having long held it, is threatened with imminent danger of losing
it, can rarely resist the temptation when it is presented of securing
success by dividing its opponents. Such a temptation is almost always
strong enough to silence other objections, and Hamilton, on those
occasions, shared the fate of party leaders who place their individual
influence in opposition to the excited passions and short-sighted
schemes of their party.
It was my fortune to hear Hamilton's great speech against the support of
Burr for the office of Governor of New York by the Federalists of the
State. I happened to visit Albany on the day appointed for the meeting,
in company with William P. Van Ness, who was a few months afterwards
Burr's second in his duel with Hamilton; and we lodged, as we were in
the habit of doing, at _Lewis's Tavern_, the place where the meeting was
to be held. Our room adjoined and communicated with the larger one in
which the meeting took place; and after its organization, Mr. Van Ness
threw open the door between the rooms, giving us a full view of the
assemblage and exposing our presence to them. I mention these
circumstances, which I recollect well, because it is my impression that
it was very unusual at that day for politicians of one party to attend
the meetings of the other. Mr. Van Ness and myself differed
irreconcilably in respect to the support of Colonel Burr, but we were
both members of the Republican party. The meeting consisted of about one
hundred very respectable looking men, generally well advanced in life,
and I remember many gray heads among them. Such was a gathering of the
Federalists, in a city in which they had complete control, called
together to hear the leader of their party, decidedly the most eloquent
man of his day, a little more than fifty years ago. _Quantum mutatus!_
My seat was so near to Hamilton that I could hear distinctly every word
he said, and three impressions of the scene are still strong in my
memory--his imposing manner and stirring eloquence, the obvious
disinclination of the larger portion of his audience to be governed by
his advice, notwithstanding the unbounded respect and love they bore
him, and the marked indignation which often sparkled on the countenance
of Van Ness whilst he was speaking.
Preferring monarchical institutions because he conscientiously believed
that republican government could not be maintained "consistently with
order," but satisfied that public opinion would not then admit of their
establishment in this country, and indisposed for the reasons I have
assigned to advocate the use of force for that purpose, yet expecting a
crisis to arrive by which the opinions of the people would be changed,
or the use of force be rendered justifiable, Hamilton entered the
cabinet of President Washington determined to recommend a line of policy
and the adoption of measures, which, whilst they would give the
Government sufficient power to sustain itself against the democratic
spirit of the country,--always the object of his dread,--would not be
out of place when a resort to the English model, the object of his
life-long choice, should have become necessary. If, in the execution of
this policy, he had confined himself to the powers intended to be
conferred upon the Federal Government by the Constitution, however much
his conduct might have been censured on account of the anti-republican
spirit it evinced, it would nevertheless have presented a very different
aspect to posterity. But this was unhappily far from his intention. No
one knew better than Hamilton that power to adopt some of the most
important of the measures included in the chart he had devised for the
action of the Federal Government was not designed to be granted to it
either by those who framed, or by those who had adopted the
Constitution, and that if there had been any reason to suspect that that
instrument conferred such powers there would not have been the slightest
chance for its ratification.
The Convention that framed the Constitution was well aware that the
portion of its labors which related to the extent of the powers to be
given to the new government was that upon which the public mind was
most sensitive. It was not ignorant how far the apprehensions of the
people upon that point had, through the entire period of our colonial
history, prevented the establishment of any general government, and even
the institution of one since the Declaration of Independence that was
adequate to the necessities of the country. It knew that the powers
given to Congress, particularly, would be the part of the Constitution
to which the attention of the friends of the State governments would be
directed, and upon which their opposition would be most likely to arise.
Understanding these things, the Convention, with that good sense and
prudence by which its entire course was so greatly distinguished,
bestowed upon that branch of its business the utmost care and
circumspection. Instead of describing the power given to Congress in
general terms, as was done by Hamilton, in the plan submitted by him for
its adoption,--viz.: "To pass all laws which they shall judge necessary
to the common defense and general welfare of the Union,"--by which much
would of necessity be left to the discretion of those who were to
execute the power, the Convention specified the powers it intended to
grant under seventeen heads, and described them in the simplest and
plainest language, so that none should be at a loss to understand their
import. So well was this design executed that no room for doubt or cavil
remained to those who had no other desire than to arrive at the meaning
of the framers of the Constitution.
Here the Convention might have stopped, for no implication could have
been more unavoidable than that Congress should have the right to
promulgate the rules they adopted by the enactment of laws. But as if
aware of the uses which the able men from whom it apprehended opposition
might make of the fact that a necessity of a resort to implication had
been left by the instrument, it granted that power also in express
terms. The principal part of that clause was moreover designed to
constitute Congress the law-maker for the other great departments of the
government, and to exclude the idea that they should also have the power
of legislation.
Having thus, as it thought, guarded the work of its hands from
misrepresentation or misinterpretation upon what it justly considered
the most delicate and, if disregarded, the most vulnerable point, and
having framed a Constitution with which all friends to republican
principles ought to be satisfied, the Convention appealed with
confidence to the ratifying conventions, and in doing so it did no more
than justice to those bodies,--the instrument, thus guarded, was
ultimately ratified by the votes of all the States.
If Hamilton, either in the articles of the "Federalist," to which he
largely contributed, or on the floor of the Convention of Ratification,
of which he was a member, had only countenanced that construction of the
Constitution which he set up for it as Secretary of the Treasury, or if
in any other way a suspicion had been produced that it was intended to
give that instrument such a construction after its ratification, its
rejection would have been inevitable. No one who has studied the state
of the public mind at that period can for a moment doubt that this would
have been the result. Such was the true character of the Constitution
which the people of the United States intended to establish, and thought
they had established, and such were the circumstances under which it was
ratified.
Hamilton was placed by Washington virtually at the head of his
administration; for, although the Secretary of State has, since that
period, been regarded in that light, no such impression had then
obtained, and in the government of Great Britain, to which attention
had been most directed, it was otherwise. The Treasury Department
wielded infinitely the most influence, and the superior confidence of
the President in the incumbent decided the point of priority, at least
for the time being. Perhaps the only question in respect to Hamilton
upon which there has never been any diversity of sentiment was in regard
to his talents. That they were of the highest order was the opinion of
all who knew him. Jefferson scarcely ever spoke of him in his letters to
Madison without admonishing him of the extraordinary powers of his mind,
and in one of them he says,--"Hamilton is really a Colossus to the
Anti-Republican party; without numbers he is a host in himself. In truth
when he comes forward there is nobody but yourself (Madison) that can
meet him." When I was Minister of the United States in England I saw
much of Prince Talleyrand, then French Ambassador at the same Court, and
enjoyed relations of marked kindness with him. In my informal visits to
him we had long and frequent conversations, in which Hamilton, his
acquaintance with him in this country, and incidents in their
intercourse, were his favorite themes. He always spoke with great
admiration of his talents, and during the last evening that I spent with
him he said that he regarded Hamilton as the ablest man he became
acquainted with in America,--he was not sure that he might not add
without injustice, or that he had known in Europe.[18] With such
advantages, greater at that time certainly than the public service of
any country afforded to any other man, it is difficult to conceive of a
more commanding position than that which he occupied. With a mind that
dwelt habitually upon great ideas, the political career of such a man
could not fail to produce important results for good or for evil. It
must not, however, be forgotten, for it is a truth which exerted a
powerful influence on his whole course, that he was at the same time, as
his friend Morris described him, "more a theoretic than a practical
man." It was natural that a mind so easily excited and an imagination so
vivid as Hamilton's seem always to have been, should have formed
exaggerated ideas as well of the extent and character of the
embarrassments under which the country was laboring, as of the causes
from which they sprang. These were undoubtedly very serious, very
difficult to be dealt with; and it is equally true that they had been
greatly aggravated by, if they were not, as he was very willing to
consider them, mainly attributable to the defects of the former federal
system. But there was some misapprehension, and no small degree of
exaggeration upon these points. We are indeed an imaginative people, and
the transfer of our fathers to a new country and climate doubtless
accounts for the great difference in this respect between ours and the
cool, deliberate, and unimpressible temperaments and character retained
by those in Europe who have the same descent. It was not to have been
expected that a country so young as our own, and as unprepared, could
have passed through a seven years' war with a powerful nation without
involving itself in grave embarrassments; but when the extent of those
embarrassments, the difficulties of dealing with them, and the then
resources of the country are now regarded, it seems impossible to avoid
the conclusion that the grounds for the alarm then so prevalent upon the
subjects of the public credit and the public revenues were greatly
overrated.
[18] At the same interview Talleyrand told me an anecdote which,
considering the depressed condition of Colonel Burr at the period to
which it referred, I thought descriptive of a harsh act on the part
of my informer, and I do not repeat it without hesitation. "Burr,"
he said, "called in pursuance of a previous communication from him,
and, his card being brought up, he directed the messenger to say
that he could not receive a visit from Colonel Burr, and referred
him, for an explanation of his refusal, to a painting hanging over
the mantel-piece in the antechamber, which was a portrait of
Hamilton."
The visit was probably one of courtesy, with a possible hope of
being able to enlist Talleyrand in his (Burr's) Mexican schemes.
Our whole foreign debt amounted to but twelve millions of dollars,
payable by installments, the last of which did not become due until
seven years thereafter. The domestic debt amounted to forty-two
millions, for the payment of which the Government was under no
obligation to make immediate provision, amounting in all to fifty-four
millions, and the annual expenses of the Government were estimated at
less than six hundred thousand dollars. This was the full extent of
federal responsibilities. Hamilton assumed some fifteen millions of the
State debts, but that was an act entirely voluntary, neither asked nor
desired by the States, unconstitutional and inexpedient, and caused as
much unpopularity to his administration of the department as, perhaps
more than, any act by which it was distinguished.
To meet these responsibilities the new Constitution had placed in the
hands of the Federal Government the power of collecting a revenue from
imposts and taxes, to borrow money on the credit of the United States to
any amount which the public service might be deemed to require, and to
regulate commerce, both foreign and domestic,--a power from the exercise
of which great improvements in the trade of the country were justly
anticipated. In aid of these resources we possessed a population of some
three and a half millions, as active and enterprising as any on the face
of the earth, just emerging from the discouragements of a defective
government, and bounding with hope into all the varieties of business
and labor, for which a fertile soil and a salubrious climate afforded
the most ample facilities. The comparison may be, and doubtless by many
will be, regarded as inappropriate; but with the views--simple but
practical--which experience has taught me, I cannot but think that if
one were instituted between the liabilities of the United States in 1790
and those of the State of New York in 1842,--between the means at the
disposal of each, and the extent to which the credit of each had been
depressed,--it would be found that speedier and more substantial relief,
and under less eligible circumstances, was obtained for the latter by
the simple and direct efforts of those unpretending financiers, Michael
Hoffman and Azariah C. Flagg, than was accomplished for the United
States by the manifold schemes that were resorted to at the period of
which we are speaking. Certain I am that if a similar comparison were
made between the difficulties which the Treasury Department of the
Federal Government had to contend with in 1790, and those which it
encountered in 1837, combined with the powerful and active hostility of
the United States Bank, the former would lose much of the apparent
importance with which tradition, the influence of a great name, and the
rhetorical applauses of modern political orators, of the Federal school,
have invested them.[19]
[19] "He smote the rock of the national resources and abundant
streams of revenue gushed forth. He touched the dead corpse of the
public credit, and it sprang upon its feet. The fabled birth of
Minerva from the brain of Jove was hardly more sudden or more
perfect than the financial system of the United States, as it burst
forth from the conceptions of Alexander Hamilton."--_Daniel
Webster._
The condition of things at the period we are considering was such as to
promise the greatest advantages from the simplest, though persevering
and well-considered, employment of the means then for the first time
placed at the disposal of the General Government.
If it had fortunately so happened that General Washington had placed
Hamilton at the head of the State Department, in which the theories
which he appears to have studied from his earliest manhood--he having,
though anonymously, at the age of twenty-three, sent to Robert Morris,
then a member of Congress, the first plan for a bank of the United
States, accompanied by an elaborate examination into monetary and
financial affairs generally, and those of the United States in
particular--would not have been called into action, and if he had
appointed Madison to be Secretary of the Treasury, the fate of his
administration and the effects of its measures in respect to parties
would have been very different. The practical character of Madison's
talents and disposition had been exemplified in the whole of his
previous career, and was conspicuous in his course on the subject of
revenue. On the second day after the votes for President and
Vice-President under the new Constitution had been canvassed, and twenty
days before the inauguration of President Washington, he commenced
operations in the new House of Representatives, of which he was a
member, to enable the new government to avail itself of the advantages
secured to it by the Constitution in regard to revenue.
To this end he introduced a bill to impose impost and tonnage duties by
which he believed all the objects of a national revenue could be secured
without being oppressive to the country, and pursued his object day in
and day out, until his bill became a law. A prompt application of the
means thus acquired to the regular payment of the interest on the public
debt, with a resort to others authorized in express terms by the
Constitution if the impost had not proved adequate to all the objects of
a national revenue, as he believed it would, and a discreet use of the
power to borrow exerted in the ordinary way, accompanied by proper
efforts to keep public expenditures at the lowest point consistent with
an efficient public service, would in all probability have been the sum
of the measures which Mr. Madison would have deemed necessary to place
the public credit at the highest desirable point and to discharge all
the existing obligations of the Government. They constitute all the
means employed by the department now, and for several years past have
proved abundantly sufficient to meet infinitely higher responsibilities,
and there is in truth no conclusive reason to be found in the history of
the period referred to why they would not have performed the same
offices then.
But these simple and usually efficacious measures did not come up to
Hamilton's standard. They fell short of what he thought necessary to the
actual wants of the public service, and still more so in regard to what
he deemed due to the efficiency, stability, and dignity of the
Government. To secure all of these objects he desired to build up a
financial system which would approach to an equality with the English
model after which he designed to construct it; and he believed that it
was in that way only that the public necessities could be amply provided
for, the public credit placed at the point which he wished it to occupy,
and the respectability of the Government be properly consulted. But this
plan required the adoption of measures which, it is not too much to say,
he knew that neither those who framed nor those who adopted the
Constitution intended to authorize. This difficulty, which to ordinary
minds would have appeared insurmountable, was overcome by a device
either of his own creation or, as I have for many years believed, the
suggestion of another.
The subject of internal improvements by the Federal Government, in
regard as well to the power of the latter over the subject as to the
expediency of its exercise, was repeatedly and very fully discussed in
Congress, whilst Mr. Rufus King and myself represented the State of New
York in the Senate of the United States. Upon the question of power we
concurred in opinion, he adhering to that of Hamilton--the construction
of such works being one of the very few powers which the latter did not
claim for the Federal Government. Notwithstanding this agreement the
subject was often canvassed between us in respect to the arguments
advanced, from time to time, in Congress, by others. On one of those
occasions, he told me that on Gouverneur Morris's visit to the city of
New York, soon after his return from the Federal Convention, he was
congratulated by his friends on the circumstance that the Convention had
succeeded in agreeing upon a Constitution which would realize the great
object for which it had been convened, and that Morris promptly and, as
Mr. King seemed to have understood it, significantly replied--"_That
will depend upon the construction that is given to it!_" Mr. King did
not state any inference he had drawn from the remark and seemed to me
indisposed to prolong the conversation upon that point, and, knowing his
habitual reserve in speaking of his old associates, I yielded to what I
believed to be his wish not to be questioned, although I was at the
moment strongly impressed by the observation. I referred to it
afterwards in a speech I made in the Senate upon the powers of the
Government, which was extensively published. At a subsequent period this
ready answer of Morris would not have attracted notice; but spoken
before even a single officer had been elected to carry the Constitution
into effect, and of course before any question as to its construction
had arisen, it was to my mind, and, as I believe, to the mind of Mr.
King, evidence of a foregone conclusion to claim under that instrument
powers not anticipated by the great body of those who framed it, or by
those who had given it vitality by their approval. The facts that this
reply had been so long remembered by Mr. King, a prominent and sagacious
member of the Convention, and repeated under the circumstances I have
detailed, were calculated to create such an impression. It gave, at
least to my view, a decided direction in respect to the source from
whence the doctrine of _implied powers_ originated. I had found it
difficult, with the opinions I had formed of Hamilton's character and
dispositions, to reconcile the first suggestion of such a policy with
them. I could believe that, in accordance with the principles which he
avowed, he might be not unwilling to carry it into effect when it was
suggested to him; but that, after advancing his opinions in a manner so
frank and fearless, notwithstanding their well understood unpopularity,
he should be found mousing over the words of the Constitution for
equivocal expressions, containing a meaning intelligible only to the
initiated, and by such methods preparing to spring a trap upon the
people, was, it appeared to me, utterly foreign to his nature and
habits. Neither was I disposed to believe that he would, at the very
moment of signing, have denounced the Constitution as inadequate to the
purposes of good government if he had then regarded it as possessing the
very extensive powers he afterwards assisted in claiming for it, nor
would he have subsequently declared it to be "a frail and worthless
fabric." His complaint upon the latter occasion would have been against
the construction that had been given to it, and not against the
Constitution itself.
Morris, whose ability no one will question, was a constant attendant
upon the Convention, took an active part in its proceedings throughout,
was on most of its committees and the _working-man_ of the last,--the
duties of which were "to revise the style of, and arrange the articles
which had been agreed to by the House,"--and the second and last draft
of the Constitution was reported by him. But it is now comparatively
unimportant with whom the latitudinarian construction of the
Constitution, which has caused so much strife and contention and so
little advantage to any person, party, or interest, originated.
Hamilton, at least, adopted it as the corner-stone of his constitutional
views, and, by his genius and the weight of his official influence, gave
it a temporary success.
For reasons which will appear in the sequel, I will confine myself to a
simple statement of the questions that were raised in respect to the
construction of the Constitution, and a few illustrations of their
character. That instrument, as has already been stated, contained a
specific enumeration of the powers given to Congress, and the reasons
have been also described for this particularity. The measures to which
they referred were known by appropriate and distinct names, and applied
to definite and well understood objects, and they have been ever since
known and understood as they were then. This enumeration of the powers
of Congress was followed, as we have seen, by a grant of authority to
that body to "make all laws which shall be necessary and proper for
carrying into execution the foregoing powers."
Under this winding-up clause of the Constitutional enumeration of the
powers of Congress, the true sense and object of which was so easy to be
understood, Hamilton claimed for that body the power of authorizing by
law measures of a substantive character, described by well understood
names, altogether different from those employed in the enumeration, such
as the incorporation of banks, &c., &c., if Congress should declare
itself of the opinion that the execution of the enumerated powers would
be materially aided by any such measures, reserving to Congress the
right of deciding whether the proposed measure would be sufficiently
useful to create the "propriety and necessity" required by the
Constitution, and placing in its breast alone the final decision of
every such question.
The objects of the Constitution, as set forth in its preamble, were "to
form a more perfect union, establish justice, insure domestic
tranquillity, provide for the common defense, promote the general
welfare, and secure the blessings of liberty to ourselves and our
posterity." The first of the powers of Congress, contained in the
enumeration of them in the Constitution, is in the following words:
"The Congress shall have power to lay and collect taxes, duties,
imposts, and excises, to pay the debts and provide for the common
defense and general welfare of the United States; but all duties, and
imposts, and excises shall be uniform throughout the United
States;"--and then follow all the other powers, to borrow money, &c.
The terms "common defense and general welfare," used in this
enumeration, were taken from the Articles of Confederation, where they
stood thus: "All charges of war, and all other expenses that shall be
incurred for the _common defense and general welfare_, and allowed by
the United States, in Congress assembled, shall be defrayed out of a
common treasury, which shall be supplied by the several States in
proportion," &c. Under those Articles they were never understood as a
substantive grant of power to the Continental Congress, or as
authorizing that body to ask from the States moneys, and to expend them
for any purposes other than those which the Articles afterwards
specified. By the new Constitution the manner of getting the money was
happily changed from State requisitions to taxes, duties, imposts, and
excises, to be expended, however, when so obtained, for the common
defense and general welfare, as before, and the Constitution then, like
the Articles of Confederation, says upon what objects it is to be
expended. The Convention which framed and those which ratified the
instrument, of course, understood the terms as used in the same sense.
But after the Constitution was ratified, without an intimation of such
a construction having been whispered before, it was contended by many
that the manner in which the terms common defense and general welfare
were used in it authorized Congress to adopt _any measure_ which that
body might deem calculated to subserve the common defense and general
welfare of the country, whilst others, less reckless, limited the power
they claimed for Congress to the application of money to any such
measures. Among the former, as to the clause in the preamble, Hamilton
placed himself, insisting that, under the grant of powers to make all
laws which shall be necessary and proper for carrying its given powers
into execution, Congress had the power to adopt every measure of
government not expressly denied to it or exclusively granted to the
States, which it should deem useful in the execution of its enumerated
powers, however variant in its name, object, and general understanding;
and under the clause quoted from the preamble an unlimited power of
taxation, and an equally unlimited authority to expend the money so
raised upon objects which it might think would promote the common
defense and general welfare. He thus claimed for Congress substantially
all legislative power, save such as was expressly prohibited to it,
given exclusively to the States, or denied to both, falling but little
if any thing short of the power he assigned to the national legislature
in his propositions submitted to the Convention, which that body would
not even consider, viz.: "to pass all laws which they shall judge
necessary to the common defense and general welfare of the Union."
When the advocates of these doctrines were asked to remember the state
of public opinion at the time when the Constitution was framed; the
jealousy which then existed and had for so many years existed, of the
power of the General Government; the fact that the apprehensions which
had been entertained had so long prevented the calling of a Convention;
the extreme improbability that the Convention, under such circumstances,
could have intended to give to Congress the power to pass any law it
might be pleased to regard as useful in the execution of an enumerated
power, whatever might be its bearing upon the State governments; to add
to the power to make peace and war and to raise armies and equip fleets;
to make the power to raise money unlimited by authorizing its
expenditure upon any measure Congress might assume to be conducive to
the common defense and general welfare, and the absurdity of the
supposition that the grant of such far-reaching and absorbing powers
would have been conferred in so obscure a way, and that the Constitution
would have passed the scrutiny of so many State Conventions without its
ever having been intimated in any way that there lay concealed in its
general terms grants of power which, if but suspected, would have set
the country in a blaze, and would have produced instant refusals to
ratify on the part of most of the States,--when such considerations were
opposed to those bold pretensions, the only reply was, the Constitution
must be construed by its letter, and we cannot look behind it or beside
it for the means of doing so truly.
To the answer that extraneous matter has always been allowed by all
laws, state and national, to be used in the interpretation of the
highest acts of sovereignty, such as the construction of treaties
between sovereign powers, of patents issued under the great seal, of
acts of Parliament, of Congress, and of State legislatures, and in
respect to the latter class the old law, the mischief and the proposed
remedy to be taken into consideration in searching for the meaning of
such acts, in the construction of wills, deeds, &c., &c., the only
rejoinder was that a Constitution was an exception to those rules; in
short that a Constitution was the sole exception to the application of
the maxim which has grown out of the observation and experience of
mankind,--_qui hæret in literâ hæret in cortice_.
The nearness of the time when the Constitution was framed to the period
of which we are speaking gave to this construction its most repulsive
aspect. The members of the Federal Convention were yet on the stage of
action, and many of them participators in the measures that were brought
forward on the strength of it. The remonstrances of those who dissented
on the ground of their own knowledge that the Convention did not
contemplate such a construction were disregarded, not because they did
not represent the truth but because the objection was inadmissible upon
principle. This was emphatically the case in respect to the
establishment of a national bank, the pioneer of constitutional
infractions, the "wooden horse" from whose sides the most violent
assaults have been made upon the Constitution. It was a fact well
remembered by the members, and subsequently confirmed by the publication
of the journal of the Convention, that a motion was made to give to
Congress power to grant acts of incorporation, as facilities to public
improvements. This fact was brought to the notice of President
Washington by Mr. Jefferson, in his opinion upon the bank question: "It
is known," said he, "that the very power now proposed as _a means_ was
rejected _as an end_ by the Convention which formed the Constitution; a
proposition was made to them to authorize Congress to open canals, and
an amendatory one to empower them to incorporate, but the whole was
rejected, and one of the reasons of rejection urged in the debate was
that then they would have power to erect a bank, which would render the
great cities, where there were prejudices or jealousies upon this
subject, adverse to the reception of the Constitution."
This communication was made directly to General Washington, who had been
President of the Convention, and made to defeat a measure of Hamilton's,
who never failed to turn every proposition of his opponents against
themselves when it was in his power to do so. It remained unnoticed, and
its truth was therefore virtually admitted. Upon the very first
question, then, which arose under the Constitution upon Hamilton's
construction, and that one first also in importance, the well-known
intentions of the Convention were directly and intentionally overruled.
President Washington gave no reasons for his decision in favor of the
Bank Bill. I will hereafter state the principle upon which I think it
fair to presume that he acted. Hamilton was influenced by views which
governed his conduct in every constitutional question that arose in his
day. He did not, because he could not with any show of propriety, deny
that the Constitution ought in strictness to be construed according to
the intentions of those who made it; but believing, doubtless sincerely,
from the beginning, that, so construed, it was insufficient for the
purposes of good government and must prove a failure, he designedly gave
it construction, in cases where he deemed that course necessary to the
public interest, in opposition to what he knew to have been the
intentions of the Convention. The objection that this was setting at
naught the declared will of the people had but little weight with him.
He believed that a majority of the Convention would have been content to
incorporate the powers he now claimed in the Constitution if they had
not been deterred by the fear that it would not be ratified, and for the
opinion of a majority of the people he made proverbial his want of
respect. He held them incapable of judging in such questions. He was as
anxious as any man to promote their happiness and welfare, but he
thought it a political necessity that this could only be done in despite
of themselves; no man could possibly be less prone than he was to the
employment of sinister means in private life, and yet he held them
excusable in dealing with the people; he thought nothing effectual and
salutary could be done with them without appeals to their special
interests, without exciting their passions and turning them to the side
of the Government. This was the vicious feature of his political creed,
and proofs of its existence could be multiplied almost without end; but,
as the subject will unavoidably and often present itself, I will content
myself here with an extract from a letter written by him to his friend
Morris, after the great public transactions in which he had been engaged
were principally ended. The last letter to Morris, from which I have
quoted, spoke of the past; this looks to the future, and shows the
lengths to which he was yet, as he had always been, willing to go. The
letter is dated April 6, 1802, in which, after complimenting Morris upon
his efforts "in resisting the follies of an infatuated administration,"
he thus points his friend to the work before them:--
"But, my dear sir, we must not content ourselves with a temporary effort
to oppose the approach of evil. We must derive instruction from the
experience before us, and learning to form a just estimate of things to
which we have been attached, there must be a systematic and persevering
endeavor to establish the fortune of a great empire on foundations much
firmer than have yet been devised. What will signify a vibration of
power if it cannot be used with confidence or energy, and must be again
quickly restored to hands which will prostrate much faster than we shall
be able to rear under so frail a system? Nothing will be done until the
structure of our national edifice shall be such as naturally to control
eccentric passions and views, and to keep in check demagogues and
knaves in the disguise of patriots."[20]
[20] Hamilton's _Works_, Vol. VI. p. 536.
This speaks for itself, and certainly nothing could be more superfluous
than an attempt to elucidate its import and extent. It deserves to be
remembered that this was in the thirteenth year of the Constitution, now
described as a "frail system," and which, in a previous letter to
Morris, was called a "frail and worthless fabric." Hamilton enforced his
construction, but upon that point we will say no more until we arrive at
a period when it was exposed to a scrutiny by which it was forever
exploded. Looking to the construction of the Constitution which I have
described for his authority to adopt the measures he deemed necessary to
establish his policy, he advanced in his work with his accustomed
industry and perseverance. The outlines of that policy were
substantially portrayed in his speeches in the Federal Convention, in
his letter to General Washington from New York during the session of
that body, and in a paper written by him after its adjournment, and now
published by his son,--all of which have already been referred to. It
was founded on a conviction, doubtless sincere and at all events not
liable to change, that great danger to the federal system was to be
apprehended from the hostility of the State governments, and on a
consequent desire to reduce their power and importance; on an immovable
distrust of the capacities and dispositions of the masses; and on an
unshaken belief that the success of the new government could only be
secured by assimilating its action to that of the English system as
nearly as that could be done without too gross, and therefore dangerous,
violation of the well understood and most cherished sentiments of the
people.
The power wielded by the English ministry, in Parliament and in the
country, springs from influences derived from various sources, mainly
from the funding system, from the Bank of England, from connection with
the East India Company, and from ability to confer government favors on
individuals and classes in the shape of offices and dignities in church
and state, of titles, pensions, bounties, franchises, and other special
privileges of great value. Its power in these respects is derived from
the crown in virtue of its prerogatives, aided by acts of Parliament
where these are required by the Constitution.
The measures which Hamilton deemed indispensable to the success of the
new government, in addition to those authorized by the Constitution,
consisted of
_First._ A funding system upon the English plan, with authority to
assume the separate debts of the States;
_Second._ A national bank; and,
_Third._ An unrestricted exercise by Congress of the power to raise
money, and the employment of the national revenue in patronizing
individual, class, and corporate interests, according to the plan
described in his report, nominally on manufactures, but embracing an
infinite variety of other concerns.
The funding system, as presented to Congress by him, as well as the bank
were not only on the English plan, but as far as that could consistently
be effected were copies of the originals, and substantially the same
reasons for their establishment here were assigned in his report as had
been given for their first creation in England. The third measure, or
rather the third in his system of measures, as set forth in the
Secretary's report, partook largely of the general character of some of
those alluded to above as sources of ministerial power in England, and,
in connection with the means of securing legitimate influence allowed by
our Constitution, would have clothed the administration here with equal
power, even without authority to grant titles of nobility,
ecclesiastical preferments and dignities, and other like privileges.
The advantages Hamilton anticipated from these measures consisted of the
effect which the fact of their establishment would have upon every
question of constitutional power, the popularity and political influence
which the administration would acquire in and through their
organization, and greater than all, of their inevitable influence upon
the future character of the institutions of the country. He might well
think that he would not thereafter have any serious difficulty in regard
to constitutional power to do what he desired, if he could obtain the
passage of acts, according to the forms of the Constitution, authorizing
Congress to _lend_ money to the States under a provision in that
instrument giving it power to _borrow_ money; to establish a national
bank, when a possible ground for pretense to such a power had been
expressly excluded from the Constitution, and when every body knew that
both the Convention that made it and a vast majority of the States and
people by whom it was adopted were at the time opposed to such an
institution; and not only to raise money upon the principle of an
unlimited power to do so, but also to expend it according to the
pleasure of the Government, subject to no other limitation than that it
should regard the purpose as conducive to the common defense and general
welfare,--a principle he distinctly avowed in his report on
manufactures. If he had succeeded in these points and secured his
advances, he would have been fully warranted in regarding the
enumeration of the powers of Congress contained in the Constitution as a
sham, and the brief clause he proposed to the Convention, giving to the
national legislature power to pass all laws which it should judge
necessary to the common defense and general welfare of the Union, as
inserted in its place. The increased power and influence derived by the
administration in the course of the organization of some of these
measures will be seen as we proceed, and my own views in respect to
their combined effects upon our institutions and upon the character of
the government, will be given hereafter.
In England the bank was first established, but Hamilton gave precedence
here to the funding system and made it the first great measure of his
administration of the Treasury Department, contenting himself in the
first instance with a declaration, in his report in favor of the funding
system, of his intention to connect a bank with it. The Secretary's
annunciation of the principles upon which he proposed to found that
system, and their resemblance to those by which the English system was
regulated, were received with unmistakable signs of dissatisfaction by
large portions of the people in all parts of the country. The
Legislature of Virginia passed by decided majorities resolutions
denouncing the Secretary's plan with great severity. These, with similar
demonstrations in other States, show the depth of the excitement of the
public mind upon the subject.
The public debt of England had its origin in an early practice of her
government to anticipate her resources through loans effected upon
pledges of portions of her revenues, to be re-imbursed, principal and
interest, at specific periods. These were made to correspond with the
time of the probable collection of the taxes out of which the loans were
to be paid; and such, it may safely be assumed, was also the origin of
public debt in all countries. For a time these anticipations were
limited in their amounts to the actual value of the fund upon the credit
of which they were obtained, the loans were discharged according to
their terms, and the operation proved to be a great convenience to the
government without prejudice to any interest. It was not long, however,
before a practice, originally no other than a fair business transaction,
was perverted to screen men in power from the odium of enforcing
taxation to repay the principal sum borrowed. The disproportion between
the revenues to be received and the anticipations successively charged
upon them soon became too great to leave the government able to pay both
principal and interest on the loans which its necessities required. Some
device was therefore desirable by which it would be enabled to replenish
the public coffers without a too great increase of taxation, which, for
obvious reasons, is always the peculiar aversion of those intrusted with
the management of public affairs. The plan adopted, in lieu of
anticipations of the revenue of the character I have described, was to
make loans upon the credit of the nation, re-imbursable at the pleasure
of the government, with special and adequate provisions for the payment
of the interest only, or to borrow money upon perpetual annuity
equivalent to the interest of the sum borrowed, government being at
liberty to redeem such annuity at any time by paying back the principal
sum, with authority also to borrow on annuities for terms of years and
for lives. These became thenceforth leading features in the English
funding system.
These facilities proved amply sufficient for every exigency. The public
debt increased with unheard of rapidity under the influence and the
expenses of the wars in which England was successively engaged. In 1706,
when its foundation was laid, it amounted to but little more than five
millions sterling, and in 1777 it had increased to one hundred and
thirty-six millions sterling. Near the latter period the subjects of
public debt, the principles of the English funding system, and their
effects in all countries where they had been adopted, were brought to a
searching scrutiny by Adam Smith in his "Wealth of Nations," who
demonstrated from reason and experience that they had invariably
enfeebled every nation which had embraced them. He insisted that there
was scarcely an instance in which a public debt contracted and
established upon those principles had been fully paid, and that the
revenues of the countries subject to such incumbrances had been relieved
from the destructive effects of an irredeemable public debt, if relieved
at all, either by avowed bankruptcy or by pretended payments through
such artifices as adulterations of the coin, or raising its
denomination, or by reductions of the rate of interest.
In 1786, four years before the introduction of Hamilton's funding
system, the public debt of England had already increased to
£276,000,000; and so rapid has been its subsequent growth that the
strictures and predictions of Adam Smith are at this day receiving their
confirmation in the existence of a national debt of more than
£800,000,000. By no people were these facts and circumstances, so far as
they had then transpired, better understood than by ours. They had
watched the condition of England, in regard to her increasing debt,
through the Revolutionary contest in the hope that she would be
compelled by the very extent of her indebtedness to stay the hand she
had uplifted to enslave them. It ought not therefore to have been a
matter of surprise to Hamilton and his associates, and cannot be to us
viewing these matters retrospectively, that his recommendation of a
funding system, upon the English plan, with a national bank as its
adjunct, as the first great measures of the new government, were
received by large portions, probably a majority, of the people, with so
much dissatisfaction and distrust of the motives in which the
recommendation had its origin--a distrust naturally produced by the
precipitate resort to the system of a nation against which the hostile
feelings of the war had not yet subsided, and which under that system,
in the estimation of many sober minded and sagacious men, was rapidly
sinking into the gulf of hopeless indebtedness.
No necessity can now be perceived for the adoption at that moment of a
scheme of such magnitude as that which Hamilton proposed--one so well
calculated to excite jealousy, and against which the warning voice of
experience had become so audible. The existing debt, sacred as the price
of liberty and entitled to all solicitude for its satisfactory
discharge, was not, in view of the increased resources of the
Government, either very large or, in any other event than a failure in
the payment of interest, ineligibly situated, or in any great danger of
soon becoming impracticable or oppressive. The foreign debt then stood
at eleven millions, the principal payable by moderate instalments, the
last of which, not due till 1808, was never, save a small portion of the
French debt, actually funded, and was paid off during the administration
of Mr. Madison. The domestic debt of the United States amounted to forty
millions, which Secretary Hamilton thought might fairly be regarded as
payable at the pleasure of the Government. The interest and instalments
as they fell due were therefore the principal subjects to be dealt with.
The change which had at last been effected in the Constitution, securing
to the Federal head full power to levy and collect all necessary
revenue, and the prospects of an improving trade and increasing
prosperity in every branch of business gave of themselves to the
Government a good right to anticipate an improvement in the public
credit sufficient to enable it to make direct loans abroad upon fair
terms, payable at specific and reasonable periods, as had been before
done without these advantages. On the avails of these, with the surplus
of an increasing revenue over and above the six hundred thousand
dollars, which was all that was asked for the support of Government in
other respects than the payment of debts, the Secretary might, it would
seem, have safely relied to meet accruing demands on account of the
public debt. It is well known that such favorable effects resulted from
the change which had taken place in the Government and our credit abroad
was so greatly improved that loans which had before been obtained with
difficulty and in a considerable degree through favor, and in part by
means of specific guaranties, were now sought after and taken with
avidity in Amsterdam and Antwerp. The friends of the Secretary, and
those who favored his policy, naturally claimed that this favorable
change was due to his report, and to the acts that were passed in
pursuance of his recommendation. A portion of the effects produced may
have been attributable to this cause, but it was rendered quite clear
that the improvement could not be thus explained as to Holland, where a
large part of our foreign debt was held and to which country the whole
was soon transferred, by the facts that her bankers not only continued
to lend freely to our Government in the old way, upon direct loans,
payable at specific periods,--principal and interest,--but expressly
declined, as did also our creditors in Antwerp, to accept our proposal
for converting the debts due upon loans of that character into a funded
domestic stock.
The whole of our foreign debt in Holland, that which was due at the time
of the passage of the act establishing the funding system as well as
that which was subsequently contracted there and at Antwerp, and the
principal part of that held elsewhere, was paid to the entire
satisfaction of the creditors by the means I have described, and
without being funded. The domestic debt, the least difficult or delicate
to deal with, would doubtless have been seasonably and satisfactorily
discharged in the same way, if General Hamilton had not, at an early
age, imbibed an opinion, which he never changed, that a permanent
national debt was an advantage to any country, and likely to be
particularly useful in a confederacy like ours. That such was his
sincere opinion there cannot be the slightest doubt, and that he
contemplated a public debt here of a character as permanent as that was
likely to be which then existed in England is fairly to be inferred from
his acts.
Hamilton's mind was from a very early period turned to politics, and of
political subjects that of finance was from the beginning the favorite
theme of his meditations, among the most prominent results of which was
a conviction that of the agencies necessary to good government, whatever
might be its form, there were none more useful than a well funded public
debt and a judiciously constructed national bank. At the early age of
twenty-three, whilst filling a post of subordinate rank in the army, he
addressed an anonymous communication (as I have before mentioned) to
Robert Morris, whose mind was inclined in the same direction, and who
was extensively employed in the management of fiscal affairs, enforcing
with much ability his favorite ideas. Some of the contents of this
communication are given in the "Life of Hamilton" by his son. In a
subsequent letter to the same gentleman, he argues in support of kindred
positions. In his report upon public credit he advances the same
favorable opinion, and in substantially the same language, of the
effects of the particular debt he proposed to fund upon terms which
promised perpetuity. He did, it is true, accompany the latter
declaration with a protest against the latitude, inviting to
prodigality, which was sometimes given to the idea of the utility of a
public debt, and with a recommendation in favor of the establishment of
a sinking fund, and other reservations and qualifications, couched in
the guarded terms usually employed by able men in state papers upon
controverted public questions. But the report contained nothing
inconsistent with the idea of keeping on foot a national debt as long as
it did not become "too large,"--a condition that could scarcely fail to
give way to the supposed exigencies of the moment,--and the farther
condition of an indispensable necessity for its continuance never found
a place in his reports or weight in his opinions. On the contrary, the
advantages of a national debt in preparing the people for those periods
of oppressive assessment to which all nations are occasionally exposed,
by constantly levying a reasonable tax to discharge interest, a
principal reason in favor of a public debt assigned in his letter to
Morris; the utility and convenience of having always at hand a band
whose special interest in the stability of the government would promptly
rally them to its support,--an idea never long absent from Hamilton's
mind; the benefits which the agricultural, manufacturing, and commercial
interests would derive from the funding of seventy millions of debt in
the form and upon the principles he proposed, giving to it the capacity
of being "substituted for money" and increasing by that amount the
floating capital, and to a great extent the circulating medium of the
country; the beneficial influence of a funded debt in raising the value
of land, in proof of which the experience of England is cited, besides
supplying those important classes with means to improve and enlarge
their respective pursuits, and increasing those facilities by reducing
the rate of interest, constituted the arguments and persuasions set
forth in glowing and captivating terms in his reports, and though not
necessarily confined to a _permanent_ national debt, indicate very
clearly, to my mind at least, that it was such a debt that he had in
view.
The uses to which the sinking fund had been applied in England and its
inefficiency in the reduction of the national debt were well understood
by the Secretary. The explanations of its greater efficacy here in after
times will be given in another place. They had no connection with the
views that were prevalent in the councils of the nation at the moment of
which we are speaking. Every act of the Secretary was in keeping with
the inference I have stated. In addition to the principle he proposed as
the basis of his system, which, if not perpetual funding in express
terms, postponed redemption to so remote and indefinite a period as to
render it next to certain that it would never occur, there were other
circumstances scarcely less confirmatory of the assumption that such was
his intention.
The stand taken by Hamilton in the provision he proposed and which was
adopted for a portion of the domestic debt had a great influence in
creating the impression that his funding system had other than fiscal
objects in view. His opponents not thinking either that system or the
bank necessary for the public service--an opinion vindicated and
sustained by subsequent experience--readily attributed the strong desire
manifested for their establishment to political designs on the part of
their author. Jefferson denounced the financial scheme as a "puzzle to
exclude popular understanding and inquiry, and a machine for the
corruption of the Legislature." In aid of the latter charge, besides
going at least some length to sustain the imputation of Hamilton's
desire for an unnecessary increase of the public debt, came these facts:
A large proportion of the domestic debt consisted of certificates of
indebtedness given by the United States to the soldiers who fought our
battles, and to the farmers, manufacturers, and merchants who furnished
supplies for their support. These had been given because the Government
had no money, but under promises of speedy payment. The holders were
frequently driven by their necessities, and by misrepresentations in
respect to the chances of payment, to part with them for trifling
amounts. Had the matter stopped there, however much regretted and
condemned, it might not have attracted the notice which was taken of it.
But when Hamilton proposed to put the original holders and the
fraudulent purchasers of these certificates upon the same footing, and
when it became known to the members of Congress, which sat with closed
doors, that the bill would pass in that shape, every part of the country
was overrun by speculators, sped by horse and packet expresses, buying
up large portions of the certificates still held by those to whom they
were originally given at the rate of five shillings and, in some
instances, of two shillings and sixpence in the pound. It was never
doubted that members of Congress and their particular friends
participated in these speculations, and realized large sums by the
certificates being funded at their nominal amounts. When the bill came
up, several gentlemen, who afterwards became prominent members of the
Republican party, earnestly supported a proposition to make a
composition between the original holders and the assignees of these
papers, allowing to the latter the highest prices they had ever brought
in the market, and settling with the former for the residue. Such an
arrangement might have been effected without embarrassment to the
treasury by satisfactory grants of public lands, and the amount of debts
might have been thus materially reduced. Mr. Madison in a sensible
speech supported the justice of some such composition; but the friends
of the Secretary in Congress, some of them interested in the result,
carried the measure which had been elaborately argued in advance by
Hamilton, in his report, and by which the whole was awarded to the
speculators. The entire transaction caused deep disgust in the minds of
many who felt solicitous for the purity of the Government, and not a few
believed that the scramble which ensued was foreseen and counted upon as
a source of influence to enlist Congress on the side of the
administration. Their hostility to a system susceptible, as they
thought, of such practices, was of course greatly inflamed.
The construction thus placed upon the Secretary's course received its
strongest confirmation from his proposal and untiring efforts for the
assumption of the State debts. The first object of a prudent financier
would seem to be to keep the debt he has to deal with at the lowest
practicable point. Hamilton, on the contrary, whilst struggling with
embarrassments in respect to the debts for which the United States were
legally bound, upon the largest portion of which many years of interest
had been suffered to accumulate, proposed to increase the liability
twenty-five millions by the voluntary assumption of debts which the
Federal Government was under no obligations to pay; an assumption not
only unsolicited on the part of the indebted States, but to which there
was the best reason for believing that several among them would be
opposed. The special representatives of the latter in the Senate, where
the proposition originated, so earnestly contested it that the clause of
the bill to carry it into effect could only be passed by a majority of
two, was in the first instance rejected in the House of Representatives
against the united influences of the administration, and could only be
reconsidered and barely carried by means of a discreditable intrigue to
which the Secretary and Mr. Jefferson, as the latter has acknowledged
with shame and contrition, were parties.
The reasons assigned by Hamilton for this forced assumption of a debt
which had never been audited, and the amount of which they were obliged
to guess at, though framed with his usual ability, cannot, I should
think, he now regarded as sufficient to justify the step. The weight
which they might by any be supposed to possess was overbalanced by the
obvious unconstitutionality of the measure. It adopted as well the debts
of the States which, upon the final settlement between them and the
United States, were found in debt to the latter, as of those which
proved to have balances in their favor, and was therefore a loan by the
Federal Government to the former class of States, made under the power
in the Constitution authorizing Congress to borrow money.
This measure, like that which preceded it, was well calculated to
strengthen the suspicion with which the minds of his opponents became
thoroughly imbued, that Hamilton in all his measures had in view the
advancement of partisan objects, from its peculiar adaptation to the
promotion of a leading point in his whole policy,--that of weakening
State authority and strengthening that of the General Government at
their expense. The distinctness and strength of expression with which
this policy was avowed by him, in papers published by his son, have
already been seen. Among the means suggested was the adoption of
measures by which the attention of the people might be diverted from the
State governments, upon which it was thought to be too intensely fixed,
and turned towards the Federal head, and by which their passions might
be excited and turned in the same channel. What single measure could
exert greater influence in giving effect to this policy or show more
strikingly the hand of a master than that by which the intense and
constant solicitude of the holders of twenty-five millions of debts,
scattered, in comparatively small sums, through the different States,
and embracing, it is fair to presume, the most active of their citizens,
was turned from the local authorities to the Federal Government, first
for the settlement of the amount, and next for the payment of their
demands,--by which the States themselves became liable for the amounts
so paid to a Government which, certainly in some of its departments,
regarded them as rival not to say dangerous powers, and by which also
the disreputable scramble for those debts, commenced in the case of the
certificates of the United States, would be revived.
The conflicting views entertained upon these subjects by Hamilton and
Jefferson soon assumed the form of a distinct and well defined issue
between the friends and political followers of each,--the former
composing the Federal party, and the latter constituting elements of
which the Republican party, then in embryo, was formed. Hamilton's
doctrine, and for a season the avowed creed of his party, was that there
were advantages in the existence of a national debt which more than
counter-balanced any evils that might arise from its unnecessary
continuance, and this faith shaped the whole course of their action upon
the subject. Its subjection to the operations of a sinking fund, and the
qualification that the amount of the debt should be kept within proper
limits, were of course features in their platform. Estimating the
results of the former here by its efficiency in England, and instructed
by the experience of all nations that restraints upon the accumulation
of debt, however solemnly imposed, are of no account with applicants for
grants from the public treasury, and unhappily little more respected by
men in power when the importunities of friends and supporters are
brought in competition with the interests of posterity, it was not
difficult to foresee the futility of these conditions. Mr. Jefferson, on
the contrary, from the beginning regarded a public debt as a "mortal
canker" from which it was the duty of the Government to relieve the
country at the earliest practicable moment, and in this spirit he and
his friends acted throughout.
The subject of Finance had not at that early period been made as
familiar to the American mind as it has since become, and the genius of
Hamilton and the sanction of Washington, which his plans were supposed
to receive, were well calculated to discourage opposition to them. But
many of those who disapproved of his course were not to be moved from
what they regarded as the line of duty by any considerations personal to
themselves. They resisted Hamilton's financial schemes from the start,
and it was in the discussions upon this issue that some, who
subsequently became famous leaders in the old Republican party, fleshed
their maiden swords. No two measures ever attracted a larger share of
the attention of the American people, excited more deeply their feelings
and their apprehensions, or exerted a greater influence upon the
politics of this country than did the funding system and the first Bank
of the United States. The peculiar results of the contest that was waged
in respect to them will be noticed hereafter.
Hamilton had done much by their establishment and organization to
strengthen the Federal arm, and proportionately to weaken the State
governments, but the influence he derived from these measures was not
sufficiently operative upon several classes whom he desired to
conciliate. The wished for impression had been made upon the commercial
class,--at all times a powerful body and by the nature of their pursuits
inclined to favor strong governments, banks, and funding systems,--upon
the domestic creditors of the General Government, upon the creditors of
the several State governments, upon all who had a passion for gambling
in stocks, to whose appetites he furnished so much aliment,--a numerous,
crafty, and influential portion of almost every community,--and upon all
who wanted to borrow or had money to lend, a class still more numerous.
Besides these, whom Mr. Canning called the "train-bands of commerce," in
general the most dangerous to encounter and the most efficient when at
his service, there were still larger interests, and in the aggregate
more powerful, upon whom the Secretary desired to make similar
impressions and to secure their attachment to his system.
In August, 1791, whilst concocting the measures by which he hoped to
secure the support of these, and flushed by the success which had
hitherto crowned his efforts, he thus (as I have already quoted)
addressed his great rival, Mr. Jefferson:--
"I own," said he, "it is my opinion, though I do not publish it in Dan
or Beersheba, that the present Government is not that which will answer
the ends of society, by giving stability and protection to its rights,
and that it will probably be found expedient to go into the British
form; however, since we have undertaken the experiment, I am for giving
it a fair course, whatever my expectations may be. The success, indeed,
so far, is greater than I had expected, and therefore at present success
seems more possible than it had done heretofore, and there are still
other and other stages of improvement, which, if the present does not
succeed, may be tried and ought to be tried before we give up the
republican form altogether."
First in the order of time among "the other and other stages of
improvement" with which the prolific mind of the Secretary was busied,
were doubtless those embraced in his "Report on Manufactures" which made
its appearance four months afterwards, and was probably then in course
of preparation. It contains more than a hundred folio pages, in print,
and is perhaps the most thoroughly elaborated and artfully devised state
paper to be found in the archives of any country. Manufactures were
alone spoken of in the title, but it embraced every species of industry
that offered the slightest chance of being successfully prosecuted in
the United States, and contained a very full and carefully considered
exposition of their respective conditions, and of the facilities by
which their success might be increased, to extend which to those
diversified interests it undertook to show was within the power and the
duty of the Government. This report, on account of the striking
illustration it affords of the progress of parties, and the powerful
influence it exerted upon their fate, is well entitled to the fullest
notice. But it is not possible within the limits I have prescribed to
myself to go as fully into the review of such a paper as justice to the
subject would require. I must therefore content myself with an abridged
account of the various branches of industry the advancement of which was
the design of its author, and of the manner in which he proposed to
accomplish his object.
The manufactured articles which he specified as fit subjects for
governmental aid were those made of skins, of iron, of wood, of flax and
hemp, bricks, coarse tiles, and potters' wares, ardent spirits and malt
liquors, writing and printing paper, hats, refined sugars, oils of
animals and seeds, soap and candles, copper and brass wares, tin wares,
carriages of all kinds, snuff, chewing and smoking tobacco, starch,
lampblack and other painters' colors, and gunpowder. This enumeration
was followed by a detailed statement of the great variety of articles
embraced in the general denominations. Besides these, which he said had
attained a considerable degree of maturity, there was a vast sum of
household manufacturing which was made not only sufficient for the use
of the families that made them but for sale also, and in some instances
for exportation, and consisted of great quantities of coarse cloths,
coatings, serges, and flannels, linsey-woolseys, hosiery of wool, cotton
and thread, coarse fustians, jeans and muslins, checked and striped
cotton and linen goods, bedticks, coverlets and counterpanes, tow
linens, coarse shirtings, sheetings, toweling, and table linen, and
various mixtures of wool and cotton, and of cotton and flax.
These observations were, he said, the pleasing result of the
investigation into which the subject of his report had led, and were
applicable to the Southern as well as to the Middle and Northern States.
He also designated the principal raw materials of which these
manufactures were composed, and which were, or were capable of being,
raised or produced by ourselves. These were iron, copper, lead, fossil
coal, wool, skins, grain, flax and hemp, cotton, wool, silk, &c., &c.
The Secretary contended that the growth and production of all the
articles last named were, in common with the manufactures of which they
constituted the raw material, entitled to the encouragement _and
specific aid of the Federal Government_.
He next pointed out the various modes in which that aid might be
afforded, varying its application according to circumstances; viz.:
1st. By _protecting duties_.
2d. By _prohibition_ of rival articles, or duties equivalent to
prohibition.
3d. By _prohibition of the exportation_ of the _materials_ of
manufactures.
4th. By _pecuniary bounties_.
5th. By _premiums_.
6th. By _exemption_ of _the materials_ of _manufactures from duties_.
7th. By _drawbacks_ of duties on the same materials.
8th. By _encouragement_ of new inventions at home and the _introduction_
of others from abroad.
9th. By _judicious regulations_ for the _inspection_ of manufactured
commodities.
10th. By facilitating pecuniary remittances; and,
11th. By facilitating the transportation of commodities _by roads and
canals_.
Of the power of the Federal Government to promote the objects spoken of
by the means suggested, with two exceptions, he said there could be no
doubt. The exceptions were the encouragement of new inventions and the
facilities to transportation by roads and canals. In respect to the
specific execution of these measures he confessed and regretted that
there was some doubt. But to the power of giving aid, so far as that
could be done by the application of money, he insisted that there was no
exception: "Whatever concerns the general interest of learning, of
agriculture, of manufactures, and of commerce are" he said, "within the
sphere of the national concerns _as far as regards an application of
money_;" and he proposed, first, to raise a fund out of the surplus of
additional duties laid and appropriated to replace defalcations
proceeding from the abolition or diminution of duty diverted for
purposes of protection, which he thought would be more than adequate for
the payment of _all bounties_ which should be decreed; and, _secondly_,
to constitute a fund for the operations of a board to be established for
promoting _arts_, _agriculture_, _manufactures_, and _commerce_. To this
Board he proposed to give power to apply the funds so raised to defray
the expenses of the emigration of artists and manufacturers in
particular branches of extraordinary importance; to induce the
prosecution and introduction of useful discoveries, inventions, and
improvements by proportionate rewards, judiciously held out and applied;
to encourage by premiums, both honorable and lucrative, the exertions of
individuals and classes in relation to the several objects they were
charged with promoting; and to afford such other aids to those objects
as might be generally designated by law;--adding to all this that it
often happens that the capitals employed are not equal to the purposes
of bringing from abroad workmen of a superior kind, and that here, in
cases worthy of it, the auxiliary agency of Government would in all
probability be useful. There are also valuable workmen in every branch
who are prevented from emigrating solely by the want of means.
Occasional aids to such persons, properly administered, might be, he
suggested, the source of valuable acquisitions to the country.
The thorough and minute consideration bestowed on its numerous details,
the well sustained consistency of the argument with the principles upon
which it was founded, the felicity and clearness with which its author's
views were expressed, and the evidence it furnished of well directed and
comprehensive research, stamp this remarkable document as the ablest
state paper that proceeded from his pen during the whole of his
political career. But able as it was, it yet, as we shall see when we
recur to the action of parties, contributed more than all that he had
before done to the prostration of the political standing of its author
and to the overthrow of his party. Its bold assumptions of power and the
jubilant spirit in which they were expressed afforded the clearest
indications, as well to his opponents as to the country, that he
regarded his victory over the Constitution as complete. He spoke of the
national legislature, unhesitatingly and as one having authority, as
possessing, in virtue of the construction of the Constitution he had
established, all the power with very limited exceptions which he
insisted in the Convention ought to be given to it.
Mr. Jefferson denounced the recommendations of the report to President
Washington with great warmth and earnestness. He described it as going
far beyond any pretensions to power under the Constitution which had yet
been set up, and as a document to which many eyes were turned as one
which was to let us know whether we lived under a limited or an
unlimited government.[21]
[21] 4 Jefferson's _Correspondence_, p. 457.
But the views of the Secretary of the Treasury in the establishment of
the policy of which we have been speaking have as yet been but
imperfectly described. They had a breadth and an extent of which
superficial observers had no idea. The increased strength the General
Government derived from turning towards itself so many and such active
men as the holders and purchasers of the public debt, State and
National, and the influence which the patronage attached to his
financial scheme would give to the existing administration, were both
important, and doubtless entered into Hamilton's designs. The views of
common minds might well have been limited to such acquisitions. But
these results fell far short of Hamilton's anticipations. His partiality
for the English system, it is natural to presume, arose in some degree
from his birth and early training; but study and reflection, I am
inclined to think, had quite as much to do with bringing his mind to the
conclusions it cherished with so much earnestness. Among the public men
of his day there was not one who appears to have devoted a larger share
of his time to examinations into and meditation upon public affairs.
There was not one who wrote more or with more ease upon the subjects of
government in general and public financial questions in particular.
Almost every thing he said and wrote and did, in these respects, went to
show that the elements of power by which the English government had been
raised from a crude and in some degree impracticable condition to the
seemingly palmy state at which it had arrived when his successive
reports were made had been justly reviewed and thoroughly considered by
him. The result of this survey was a conviction that for the favorable
changes, as he regarded them, which had taken place in the condition of
England she was more indebted to the operation of her bank and funding
system than to any other cause. These, like his corresponding systems,
had been originally formed for the accomplishment of immediate and
limited objects. His were avowedly to revive and to uphold our sinking
public credit; theirs, to relieve the government established by the
Revolution of 1688 from its dependence upon the landed aristocracy for
its revenues, and to secure the acquisition of ample means to defray the
expenses of the war in which England was at the time involved. From such
beginnings these principal measures, aided by kindred and affiliated
establishments of which they were the parents, had with astonishing
rapidity developed a great political power in the state, soon and ever
since distinguished from its associates in the government of the country
as the MONEY POWER,--a power destined to produce greater changes in the
workings of the English system than had been accomplished by the
Revolution itself.
The rival powers of the state had down to that period consisted of the
crown and the landed aristocracy. The measures out of which the money
power was constructed were designed, as has been stated, to render the
former, restored to greater favor with the nation by the Revolution,
more independent of the latter than it had hitherto been. This new power
had not only performed its duty in that regard, acting in the capacity
of umpire between the crown and the landed aristocracy, (the latter
before so omnipotent,) but had at times found itself able to control the
action of both through the influence of public opinion, to which it had
given a vitality and force it never before possessed.
Mr. Bancroft, in his able history of the United States, has given a
condensed and I have no doubt a very correct account of the rise and of
a part of the progress of the money power in England, as they are
presented by her historians. His entire remarks upon the subject are
full of interest and instruction, and I regret that I am obliged to
restrict myself to the following extract:--"Moreover, as the expenses of
wars soon exceeded the revenue of England, the government prepared to
avail itself of the largest credit which, not the accumulations of
wealth only, but the floating credits of commerce, and the funding
system could supply. The price of such aid was political influence. That
the government should, as its paramount policy, promote commerce,
domestic manufactures, and a favorable balance of trade; that the
classes benefited by this policy should sustain the government with
their credit and their wealth, was the reciprocal relation and
compromise on which rested the fate of parties in England. The floating
credits of commerce, aided by commercial accumulations, soon grew
powerful enough to balance the landed interest; stock aristocracy
competed with feudalism. So imposing was the spectacle of the
introduction of the citizens and of commerce as the arbiter of
alliances, the umpire of factions, the judge of war and peace, that it
roused the attention of speculative men: that at last Bolingbroke,
claiming to speak for the landed aristocracy, described his opponents,
the Whigs, as the party of the banks, the commercial corporations, and
'in general, the moneyed interest;' and the gentle Addison, espousing
the cause of the burghers, declares nothing to be more reasonable than
that 'those who have engrossed the riches of the nation should have the
management of its public treasure, and the direction of its fleets and
armies.' In a word the old English aristocracy was compelled to respect
the innovating element embodied in the moneyed interest."[22]
[22] 3 Bancroft's _History of the United States_, p. 8.
The full establishment here of a similar power, by attaching to the bank
and funding systems the political influence they had acquired in
England, was, beyond all doubt, the "other and still other stages of
improvement" alluded to by Hamilton in his encouraging conversation with
Jefferson, in which he expressed a hope, for the first time, that the
inadequacy of the Constitution might yet be overcome, and the necessity
of returning to the English _form_ be at least postponed. That the
leading supporters of his policy at least understood and entered into
Hamilton's views will be seen in the following extract from a letter
written to him by Fisher Ames, which will be found in the first volume
of Randall's "Life of Jefferson," at p. 638: "All the influence of the
moneyed men ought to be wrapped up in the Union (Federal Government) and
in one Bank," &c.
Of the three great elements of power under the English system--the
crown, the landed aristocracy, and the moneyed interest--Hamilton
regarded the latter, I have no doubt, as the most salutary even in
England. There was little in the pride, pomp, and circumstance of the
kingly office, and still less in the feudal grandeur of a landed
aristocracy, to captivate a mind like his; he advocated the monarchical
form for special reasons of a very different character, and these he
assigned in the Convention. Indeed, he all but expressed this
preference when he said to John Adams,--"Strike out of the English
system its corruptions and you make the government an impracticable
machine." Corruption in some form being the means by which the money
power ordinarily exerts its influence, Hamilton was not slow in
foreseeing the advantages to be derived from that power in the United
States. It is true that the influence it exerted in England was liberal
in its character, and beneficial, at least in its political bearings, to
the middle classes. We have seen that one object and a principal effect
of its establishment was to reduce the overshadowing influence of the
landed aristocracy which existed so long and exerted a sway so imperious
over the country--an object in the accomplishment of which the members
of the "stock aristocracy" were, in all probability, not a little
stimulated by recollections of their past exclusions not only from all
participation in the management of public affairs, but also from many
social distinctions. The landed aristocracy of England is composed of a
race of men superior in manly virtues and consistency of character to
similar classes in other countries, but notwithstanding these undeniable
and commendable traits they are, by force of their condition and by the
law of their minds, in a great degree the result of that condition,
unwilling to extend to their unprivileged fellow-subjects that equality
in public and private rights to which we republicans consider them
justly entitled. In this respect there is no difference between them, be
they Whigs or Tories,--their first duty being, in the estimation of
both, to "stand by their order." It is equally true that it did not
comport with Hamilton's policy to promote the establishment of any power
here the influence of which would enure to the increase and security of
political power in the people, and that, to answer his purposes, the
results of the operations of the money power here must be the reverse
of what they were in England. He was too well versed in politics and
parties not to know that the action of every political organization in a
state takes its direction from the character and condition of its
principal rival, and that all have their rivals. If one is not found to
exist they will soon make one, for such is the natural operation of
political parties in any degree free.
We differed greatly from England in the condition and political aspect
of affairs; we had no monarchical institutions, no landed aristocracy to
excite the rivalry and opposition of the money power. It was itself, on
the contrary, destined, when firmly established, to become whatever of
aristocracy could co-exist with our political system. Its natural
antagonist would be the democratic spirit of the country,--that spirit
which had been the lion in Hamilton's path from the beginning, the dread
of which had destroyed his usefulness and blasted the fair prospects
that were presented to the youthful patriot,--that spirit which he
doubtless sincerely believed adverse to order, and destitute of due
respect for the rights of property. It was to keep down this spirit that
he desired the establishment of a money power here which should stand by
the Government as its interested ally, and support it against popular
disaffection and tumult. He well understood that, if he accomplished
that desire, they would soon become the principal antagonistic
influences on our political stage. He knew also, what was not less
satisfactory to his feelings, that if the anticipations, not to say
hopes, which he never ceased to entertain, should be realized, of the
presentation of a fair opportunity for the introduction of his favorite
institutions without too great a shock to public feeling; there could be
no class of men who would be better disposed to second his views than
those whose power in the state he had so largely contributed to
establish. To be allied to power, permanent, if possible, in its
character and splendid in its appendages, is one of the strongest
passions which wealth inspires. The grandeur of the Crown and of the
landed aristocracy affords a fair vent to that in England. Here, where
it is deprived of that indulgence, it maintains a constant struggle for
the establishment of a moneyed oligarchy, the most selfish and
monopolizing of all depositories of political power, and is only
prevented from realizing its complete designs by the democratic spirit
of the country.
Hamilton succeeded for a season in all his wishes. He established the
money power upon precisely the same foundations upon which it had been
raised in England. He founded a political school the implied alliance
between which and the Government was similar to that which was formed
between the money power in England and the Revolutionary Government in
1688. A party adhering inflexibly to the leading principle of that
school had survived his own overthrow, is still in existence, and will
continue to exist as long as ours remains a free Government, and as long
as the characters and dispositions of men remain what they are. To
combat _the democratic spirit_ of the country was the object of its
original establishment, an object which it has pursued with unflagging
diligence, by whatever name it may have been designated.
Having brought the general subject to this point it is due to truth and
justice that I should, before I proceed farther, refer to considerations
connected with Hamilton's motives which have been already but casually
and partially noticed.
In all his steps he was doubtless influenced at bottom by a sincere
desire to promote the good of his country, and as little by personal
views as ordinarily falls to the lot of man. A riveted conviction that
the masses were destitute of a sufficient love of order and respect for
private rights, with an entire distrust, consequently, of their capacity
for self-government, lay at the foundation of his whole course,--a
course which the matured judgment of the country has definitively
condemned as to both teacher and doctrine. Subsequent experience of long
duration has shown, as I have remarked already, that the dispositions of
our people are eminently conservative in respect to public order and the
rights of property; exceptions to the general rule have been witnessed
here as well as elsewhere, but they have been of very limited duration
and seldom the cause of much mischief. There have been few if any
countries that have been more fortunate in this regard.
I have also spoken of Hamilton's preference for monarchical
institutions, upon evidence of which I have not felt myself at liberty
to doubt. But it is due to the memory of that distinguished man that we
should speak of his disposition in that respect with more precision than
might be deemed necessary in other cases. To assume that he was a friend
to monarchy as it existed in England in the times of the Stuarts and
their predecessors would be doing him gross injustice. No man in the
country, in his day, respected less the absurd dogma of the divine right
of kings, or regarded with more contempt the reverence paid by gaping
crowds to the pomp and pageantry of royalty and to the carefully guarded
relics and reliquaries of the hoar institution of monarchy, than
Alexander Hamilton. He was, beyond all doubt, entirely sincere when he
said, in the Federal Convention, that he "was as zealous an advocate for
liberty as any man whatsoever, and trusted he would be as willing a
martyr to it, though he differed as to the form in which it was most
eligible;" and had he been a fellow-subject and contemporary of Russell,
and Sydney, and Hampden, we may believe that he would have proved
himself as prompt as either to make sacrifices equal to theirs in
resistance to arbitrary power. Expectations of personal advantages
through the favor of royalty did not enter into the formation of his
opinions. It was monarchy as modified and re-established by the
Revolution of 1688 that was the object of Hamilton's preference. In the
same speech from which I have just quoted he gave with manly candor his
reasons for believing that the English model presented the fairest
chance of any system then extant for the selection of a good executive.
He contrasted the probable advantages in this regard between a chief
magistrate selected, in the first instance, by Parliament and continued
by descent, and one elected by the people for a limited period, and
frankly argued in favor of the former. His opinion was mainly controlled
by that want of confidence in the capacity of the people for
self-government which he never hesitated to acknowledge, and which, as I
have said, lay at the foundation of his political views. But it was not
the king, as such, that he sought after, but a competent chief
magistrate; and he advocated monarchical institutions only because he
thought them the most likely to produce such an one. In a speech
delivered by him in the New York Ratification Convention, which bears
the stamp of his own revision, he said, "It is an undeniable truth that
the body of the people in every country sincerely desire its prosperity,
but it is equally unquestionable that they do not possess the
discernment and stability necessary for systematic government." He never
exhibited a preference for monarchy in the abstract; no one ever heard
him express a partiality for or an attachment to this or that royal
family save as their acts were more or less meritorious, and I cannot
think that such considerations ever swayed his course. He treated the
question not as one of personal preference, but as one involving the
chances of good government. In deciding this question he may have erred,
and few in our country can deny or seriously doubt that he did greatly
err; but it was a question that he had a right to entertain, more
especially at the formation of the Government, and one in respect to
which, his opinion having been honestly formed, error could not fairly
be made the subject of reproach.