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The residence law that passed Congress in July 1790, establishing Philadelphia as the interim capital,
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Ron Chernow |
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Determined not to be caught shorthanded in case of war, Hamilton supported "an annual purchase of military weapons" to aid "the formation of arsenals."57 So vital were supplies to national security that Hamilton did not rule out government-owned arms factories."
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Ron Chernow |
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As always, Hamilton cited constitutional grounds for his program, invoking the clause that gave Congress authority to "provide for the common defence and general welfare."59 Owing in part to Hamilton's generous construction of this clause, it was to acquire enormous significance, allowing the government to enact programs to advance social welfare."
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Ron Chernow |
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John D. Rockefeller was the Protestant work ethic in its purest form, leading a life so consistent with Weber's classic essay that it reads like his spiritual biography.
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Ron Chernow |
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December 14, 1790, one day after he jolted Congress with his call for an excise tax on liquor, Alexander Hamilton submitted another trailblazing report, this one a clarion call to charter America's first central bank.
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Ron Chernow |
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The Bank of the United States would enable the government to make good on four powers cited explicitly in the Constitution: the rights to collect taxes, borrow money, regulate trade among states, and support fleets and armies.
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Ron Chernow |
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Although scheduled to start in early March, the House and Senate took more than a month to muster quorums. In a significant piece of symbolism, the House met on the ground floor of Federal Hall and provided open galleries for visitors.
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Ron Chernow |
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As we shall see, Burke stewed about the episode and awaited a strategic moment to retaliate. He and other southerners perhaps also took umbrage at Hamilton's frank statement that patriotic operations in the south had been hampered "by a numerous body of slaves bound by all the laws of injured humanity to hate their masters."60 Hamilton was admitting that masters deserved to be hated by their slaves and had behaved logically in sympathizing ..
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Ron Chernow |
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b82d9e1
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Hamilton seemed to spark controversy at every turn. At the time of his July Fourth oration, New York still had not selected its first two senators. Under the Constitution, this decision fell to state legislatures, insuring that local mandarins would have a disproportionate say in the matter.
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Ron Chernow |
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0a6e5e2
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In the felicitous words of one early Burr biographer, "The Clintons had power, the Livingstons had numbers, and the Schuylers had Hamilton."
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Ron Chernow |
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Hamilton induced Philip Schuyler to renege on his pledged support for Duane in favor of King.
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Ron Chernow |
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With finely honed political instincts, George Clinton saw that Hamilton was overreaching, and he secretly aided King's candidacy in order to drive a wedge between the Schuylers and the Livingstons. When New York picked its second senator on July 16, 1789, Rufus King came out on top. Just as Clinton suspected, Chancellor Robert R. Livingston was irate and gradually moved into the governor's camp.
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Ron Chernow |
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in April, the president-elect had stopped at Morris's opulent residence. "The treasury, Morris, will of course be your berth," Washington confided. "After your invaluable services as financier of the Revolution, no one can pretend to contest the office of the secretary of the treasury with you."
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Ron Chernow |
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Citing private reasons--Morris was already lurching down a long, slippery path that led to bankruptcy and debtors' prison--Morris politely declined the offer.
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Ron Chernow |
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everything that Hamilton planned to create to transform America into a powerful, modern nation-state--a central bank, a funded debt, a mint, a customs service, manufacturing subsidies, and so on--was to strike critics as a slavish imitation of the British model.
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Ron Chernow |
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4009918
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Then, on Friday, September 11, 1789, thirty-four-year-old Alexander Hamilton was officially nominated for the job. The appointment was confirmed by the Senate the same day.
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Ron Chernow |
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Hamilton hit the ground running: the very next day, he arranged a fifty-thousand-dollar loan for the federal government from the Bank of New York. The day after that, a Sunday, he worked all day at the Treasury's new office on Broadway, just south of Trinity Church. He dashed off a plea to the Bank of North America in Philadelphia, asking for another fifty thousand dollars.
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Ron Chernow |
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73d1983
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From modest origins, the Treasury offices proliferated until they occupied the entire block. The 1791 city directory gives an anatomy of this burgeoning department, with 8 employees in Hamilton's office, 13 in the comptroller's, 15 in the auditor's, 19 in the register's, 3 in the treasurer's, 14 in the office for settling accounts between the federal government and the states, and 21 in the customs office on Second Street, with an additiona..
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Ron Chernow |
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Aware of the widespread prejudice against banks, Hamilton knew he needed to set out their advantages. Echoing Adam Smith, he showed how gold and silver, if locked up in a merchant's chest, were sterile. Deposit them in a bank, however, and these dead metals sprang to life as "nurseries of national wealth," forming a credit supply several times larger than the coins heaped in the bank's vaults.13"
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Ron Chernow |
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dc79506
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But who would direct this mysterious bastion of money? Its ten million dollars in capital would be several times larger than the combined capital of all existing banks, eclipsing anything ever seen in America. Hamilton, wanting the bank to remain predominantly in private hands, advanced a theory that became a truism of central banking--that monetary policy was so liable to abuse that it needed some insulation from interfering politicians: "..
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Ron Chernow |
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To safeguard the public interest, the government would become a minority stockholder in the bank and able to vote for directors. Of the
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Ron Chernow |
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To embarrass Madison, Elias Boudinot read aloud in Congress some passages about the "necessary and proper" clause from Federalist number 44, notably the following: "No axiom is more clearly established in law or in reason than wherever the end is required, the means are authorized; wherever a general power to do a thing is given, every particular power for doing it is included."26 Hamilton probably tipped off his old friend that Madison had..
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Ron Chernow |
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Hamilton lent his opinion the erudition of a treatise and the warmth of a manifesto. The essence of it was that government must possess the means to attain ends for which it was established or the bonds of society would dissolve. To liberate the government from a restrictive reading of the Constitution, Hamilton refined the doctrine of "implied powers"--that is, that the government had the right to employ all means necessary to carry out po..
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Ron Chernow |
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Washington was taciturn, once advising his adopted grandson, "It is best to be silent, for there is nothing more certain than that it is at all times more easy to make enemies than friends." --
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Ron Chernow |
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Meanwhile, the secretive Senate met upstairs in a chamber without a spectator section. For the first five years, senators conducted their business behind closed doors.
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Ron Chernow |
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during the summer and early fall. In the House, James Madison helped to compress dozens of changes to the Constitution recommended by the state conventions into twelve amendments; the first ten, when ratified by the states, would be known as the Bill of Rights.
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Ron Chernow |
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And in the Senate, Oliver Ellsworth took the lead in drafting a judiciary act that provided for a six-member Supreme Court, buttressed by federal district and circuit courts.
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Ron Chernow |
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On May 19, Representative Elias Boudinot of New Jersey, Hamilton's old patron from Elizabethtown, proposed that Congress establish a department of finance.
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Ron Chernow |
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starters, it would be more efficient, since there would be one overarching scheme for settling debt instead of many small, competing schemes.
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Ron Chernow |
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It also reflected a profound political logic. Hamilton knew that bondholders would feel a stake in preserving any government that owed them money. If the federal government, not the states, was owed the money, creditors would shift their main allegiance to the central government.
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Ron Chernow |
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to be an essential ingredient in its structure that it shall be under a private not a public direction, under the guidance of individual interest, not of public policy."18"
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Ron Chernow |
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To make good on payments, Hamilton knew he would have to raise a substantial loan abroad and boost domestic taxes beyond the import duties now at his disposal. He proposed taxes on wines and spirits distilled within the United States as well as on tea and coffee. Of these first "sin taxes," the secretary observed that the products taxed are "all of them in reality luxuries, the greatest part of them foreign luxuries; some of them, in the ex..
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Ron Chernow |
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A sinking fund is a repository, set up apart from the general budget, for revenues to pay off debt.) It would sequester revenues from the sudden whims of grasping politicians who might want to raid the Treasury for short-term gain. The sinking fund would retire about 5 percent of the debt each year until it was paid off.
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Ron Chernow |
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Because the Constitution made no mention of a cabinet, Washington had to invent it. At first, this executive council consisted of just three men: Hamilton as secretary of the treasury, Jefferson as secretary of state, and Henry Knox as secretary of war. The first attorney general, thirty-six-year-old Edmund Randolph of Virginia, had no department and received an annual retainer of $1,500 for an essentially consultative role. Viewed as the g..
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Ron Chernow |
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Perhaps the main reason that Washington and Hamilton functioned so well together was that both men longed to see the thirteen states welded into a single, respected American nation. At the close of the war, Washington had circulated a letter to the thirteen governors, outlining four things America would need to attain greatness: consolidation of the states under a strong federal government, timely payment of its debts, creation of an army a..
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Ron Chernow |
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Such outings were rare during Hamilton's harried first days in office. He had to create a customs service on the spot,
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Ron Chernow |
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During his second day in office, he issued a circular to all customs collectors, demanding exact figures of the duties accumulated in each state. When they sent back suspiciously low numbers, Hamilton, who knew something about smuggling from St. Croix, suspected that it must be rife along the eastern seaboard, leading him to the next logical step. "I have under consideration the business of establishing guard boats," he told one corresponde..
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Ron Chernow |
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In a significant decision, he decided that customs revenues could be paid not just in gold and silver but with notes from the Bank of New York and the Bank of North America, an innovation that began to steer the country away from use of coins and toward an efficient system of paper money.
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Ron Chernow |
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Even later, as a private citizen, he said that his own "scrupulousness" had prevented him from "being concerned in what is termed speculation."9 This made his blindness to Duer's shameless machinations the more bewildering. Hamilton was an extremely perceptive judge of character, and William Duer was one of the few cases in which his acute vision seems to have been blinkered."
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Ron Chernow |
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Far from being a pro-British lackey, much less a high-level spy, Hamilton stubbornly defended U.S. interests at every turn. He was bargaining with Beckwith, not groveling. He insisted that the United States should be able to trade with the British West Indies.
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Ron Chernow |
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wanted England to heed the peace treaty and relinquish its western forts in the Ohio River valley. The one place where Hamilton deviated from official policy was in applauding Britain's refusal to hand over slaves who had defected during the Revolution. "To have given up these men to their masters, after the assurances of protection held out to them, was impossible," Hamilton told Beckwith."
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Ron Chernow |
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What mattered was that people trusted the government to make good on repayment: "In nothing are appearances of greater moment than in whatever regards credit. Opinion is the soul of it and this is affected by appearances as well as realities."
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Ron Chernow |
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Hamilton stole the moral high ground from opponents and established the legal and moral basis for securities trading in America: the notion that securities are freely transferable and that buyers assume all rights to profit or loss in transactions.
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Ron Chernow |
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The government would have to track them down, ascertain their sale prices, then trace all intermediate investors who had held the debt before it was bought by the current owners--an administrative nightmare. Hamilton could have left it at that, ducking the political issue and taking refuge in technical jargon. Instead, he shifted the terms of the debate. He said that the first holders were not simply noble victims, nor were the current buye..
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Ron Chernow |