Chapter III (2)

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.