by Ron Chernow
The wrangling between Congress and the administration over Indian warfare reached a crisis when legislators launched an investigation and asked Knox in late March for his correspondence relating to the ill-fated St. Clair campaign. Aware that revealing these papers might redefine the separation of powers, Washington assembled his cabinet and told them, according to Jefferson, that he wished their decision “should be rightly conducted” because it might “become a precedent.”63 The cabinet ruled that “the executive ought to communicate such papers as the public good would permit and ought to refuse those the disclosure of which would injure the public.”64 This equivocal decision left the question of executive privilege up in the air. In its final report, Congress vindicated St. Clair’s management of the debacle, placing the onus squarely on Washington’s administration by lambasting the logistical support the army had received.
Thus far Washington’s Indian policy added up to a well-meaning failure: he had been able neither to negotiate peace nor to prevail in war. To restore the army’s battered reputation, he appointed Anthony Wayne, the quondam hero of Stony Point, to lead the new augmented army in the Northwest Territory. The redoubtable Wayne instituted tough measures to instill discipline in the new army and shaved, branded, and whipped soldiers to sharpen their performance. While pleased with Wayne’s rigor, Henry Knox introduced a caveat: “Uncommon punishment not sanctioned by law should be admitted with caution.”65 The creation of this new, more professional army only heightened the qualms of those who feared a standing army and exacerbated the growing political divisions in Philadelphia. Nonetheless, under Wayne’s leadership, the army would reverse the disastrous direction that Indian warfare had taken during the unsuccessful Harmar and St. Clair campaigns.
CHAPTER FIFTY-FIVE
A Tissue of Machinations
AS THE FIRST PRESIDENT, George Washington hoped to float above the political fray and avoid infighting, backbiting, and poisonous intrigue. He wanted to be an exemplary figure of national unity, surmounting partisan interests, and was therefore slow to spot the deep fissures yawning open in his administration. In June 1790 he told Lafayette, “By having Mr Jefferson at the head of the Department of State . . . Hamilton of the Treasury and Knox of that of War, I feel myself supported by able coadjutors, who harmonize together extremely well.”1 Washington always worked hard to appear impartial and to impress the electorate that he was president of all the people. This pose of immaculate purity was congenial to him, as he sought a happy medium in his behavior. Despite holding firm opinions, he was never an ideologue, and his policy positions did not come wrapped in tidy ideological packages. Rather, they developed in a slow, evolutionary manner, annealed in the heat of conflict.
Washington and other founders entertained the fanciful hope that America would be spared the bane of political parties, which they called “factions” and associated with parochial self-interest. The first president did not see that parties might someday clarify choices for the electorate, organize opinion, and enlist people in the political process; rather he feared that parties could blight a still fragile republic. He was hardly alone. “If I could not go to heaven but with a party,” Jefferson opined, “I would not go there at all.”2 Yet the first factions arose from Jefferson’s extreme displeasure with Hamilton’s mounting influence. They were not political parties in the modern sense so much as clashing coteries of intellectual elites, who operated through letters and conversations instead of meetings, platforms, and conventions. Nonetheless these groups solidified into parties during the decade and, notwithstanding the founders’ fears, formed an enduring cornerstone of American democratic politics.
Disturbed by the expansion of federal power under Hamilton’s programs, Jefferson and Madison suspected a secret counterrevolution was at work, an incipient plot to install a monarchical government on the British model. Their defeat over the bank bill in late February 1791 convinced them that Hamilton had hopelessly bewitched the president. Hamilton’s assertion of federal power also awakened fears that meddlesome northerners might interfere with southern slavery. As one Virginian later said, “Tell me, if Congress can establish banks, make roads and canals, whether they cannot free all the slaves in the United States.”3
Unlike the Anglophile Hamilton, Jefferson and Madison often seemed to want to make the American government everything that the British government was not. To denigrate his foes, Jefferson applied to them hyperbolic labels, including “monocrats” and “Anglomen”—words with an evocative conspiratorial ring. As the French Revolution grew more sanguinary, Hamilton in turn demonized the Jeffersonians as involved in a worldwide Jacobin conspiracy emanating from Paris.
To organize opposition to the dangerous political backsliding that they perceived, Jefferson and Madison took a tour of New York and New England in May- June 1791. The cover story Jefferson supplied to Washington was that he needed a break “to get rid of a headache which is very troublesome, by giving more exercise to the body and less to the mind.”4 Jefferson and Madison supposedly planned to collect botanical specimens, but they actually intended to recruit political partisans, especially on Hamilton’s home turf of New York. A courtly, charismatic leader, Jefferson was adept at fostering camaraderie among like-minded politicians. If more circumspect, Madison was no less crafty or committed to the cause. The long-standing friendship of these two men now deepened into a powerful political partnership.
It seems strange that the revolt against Washington’s administration originated with a member of his own cabinet and a close confidant. When the president delivered his annual message to Congress in October 1791, Madison chaired the House committee that drafted a response, and Washington asked him to draft his own reply to that document. At the time, no political protocol insisted that disgruntled cabinet members should resign from an administration with which they disagreed. Nor was there yet a tradition of a loyal opposition. Washington sometimes found it hard to differentiate between legitimate dissent and outright disloyalty. He tended to view criticism as something fomented by wily, demagogic people, manipulating an otherwise contented populace.
In an extreme act of duplicity, Madison and Jefferson installed a flaming critic of Washington right in the heart of his own government. They wanted to counter the views of John Fenno, editor of the pro-administration Gazette of the United States, which Jefferson accused of peddling “doctrines of monarchy, aristocracy, and the exclusion of the influence of the people.”5 To woo him to Philadelphia, Jefferson offered a job as State Department translator to the poet Philip Freneau, who knew only one language and was scarcely qualified. The suggestion came from Madison, a friend and former Princeton classmate of his. During the war Freneau had written a rhapsodic paean to Washington entitled “Cincinnatus.” After being incarcerated in a loathsome British prison ship, he came to detest everything British and turned against President Washington and the Hamiltonian program with a vengeance. In late October 1791, after taking the State Department job, Freneau launched the National Gazette, which became the virulent organ of the Jeffersonian opposition. In its premier issue, it accused Hamilton of being the kingpin of a monarchist conspiracy and touted Jefferson as the “colossus of liberty.”6
Before long the two factions took on revealing names. The Hamiltonian party called itself Federalists, implying that it alone supported the Constitution and national unity. It took a robust view of federal power and a strong executive branch, and it favored banks and manufacturing as well as agriculture. Elitist in its politics, it tended to doubt the wisdom of the common people, but it also included a large number of northerners opposed to slavery. The Jeffersonians called themselves Republicans to suggest that they alone could save the Constitution from monarchical encroachments. They believed in limited federal power, a dominant Congress, states’ rights, and an agrarian nation free of the corrupting influence of banks, federal debt, and manufacturing. While led by slaveholders such as Jefferson and Madison, the Republicans credited the wisdom of the common
people. Washington and Hamilton believed wholeheartedly in an energetic federal government, whereas Jefferson and Madison feared concentrated power.
By 1792 Washington’s cabinet was split down the middle; Knox typically leaned toward Hamilton, and Randolph toward Jefferson. Washington never openly identified with the Federalists and steadfastly hewed to his nonpartisan self-image, though he sided more often with Hamilton and Knox. Jefferson never doubted Washington’s integrity or patriotism and could hardly claim that the man who had resigned his commission at the end of the war and rejected pleas to become a king harbored royal ambitions. So he ended up explaining Washington’s support for Hamilton’s policies by suggesting that the treasury secretary, a cunning master-mind, had duped the credulous president into supporting programs he did not fully comprehend.
ON DECEMBER 5, 1791, Hamilton aroused the darkest fears of his opponents when he submitted to Congress another major state paper, the Report on Manufactures . At a time when the country was overwhelmingly agricultural, Hamilton devised a visionary blueprint of ways that the federal government, through selective bounties and import duties, could galvanize manufacturing. He and Washington recalled how reliance on foreign manufactures had crippled America in wartime; the report was driven partly by the desire for strategic self-sufficiency. As an adjunct to this report, Hamilton fostered the growth of an organization, the Society for Establishing Useful Manufactures (SEUM), to demonstrate the feasibility of American manufacturing. At the Great Falls of the Passaic River in New Jersey, the society planned to set up the town of Paterson as a model for American manufacturing.
Far from being Hamilton’s willing dupe, Washington understood his programs thoroughly. Though he knew America would remain agricultural, he wanted to augment its manufacturing capacity. Starting with his inauguration, he had delighted in wearing clothes of American manufacture to stimulate the textile industry. At Mount Vernon he refused to drink porter or eat cheese that was not produced in America. In his discarded first inaugural address, he had endorsed government action to open canals, improve roads, and stimulate internal improvements. It was Washington who encouraged Hamilton to assist the growth of cotton and hemp through government bounties. Though a planter, Washington was receptive to labor-saving gadgetry, even if it meant using female and child labor. In January 1790 he viewed the operation of a new threshing machine and came away enthusiastic. “Women or boys of 12 or 14 years of age are fully adequate to the management of the mill or threshing machine,” he wrote in his diary. “Upon the whole, it appears to be an easier, more expeditious, and much cleaner way of getting out grain than by the usual mode of threshing.”7 When he toured a Philadelphia cotton factory, one newspaper reported that the president “attentively viewed the machinery and saw the business performed in its different branches, which met with his warmest approbation.” 8 Congress failed to act on Hamilton’s manufacturing report. In Washington’s view, it didn’t “comport with the temper of the times,” but he still availed himself of every opportunity to promote American manufacturing.9
The same day that Hamilton delivered his report to Congress, Madison unleashed an anonymous assault on the Washington administration, accusing it of laying the groundwork for a monarchy. He deplored the “increasing splendor and number of prerogatives” enjoyed by the executive branch, which might “strengthen the pretexts for an hereditary designation of the magistrate.”10 Hamilton, aware of the orchestrated nature of these salvos, wrote to Vice President Adams, “The plot thickens.”11
Starting in the summer of 1791, the Jeffersonians followed with alarm the rampant speculation in government bonds and bank shares. On July 4, 1791, the Treasury had begun selling shares in the new Bank of the United States, and pent-up demand proved so explosive that the entire subscription sold out in one frantic hour. Swarms of investors invaded the Treasury building, mobbing the clerks. For Hamilton’s supporters, it was dramatic proof of the trust that investors placed in the new institution. Now an unashamed bank booster, Washington exulted over this initial offering: “The astonishing rapidity with which the newly instituted bank was filled gives an unexampled proof (here) of the resources of our countrymen and their confidence in public measures.”12 Although the par value of bank stock was $400 per share, Hamilton, to make it affordable to small investors, allowed them to make $25 down payments; in exchange, they received certificates called scrip, which entitled them to purchase full shares in future installments.
In the next few weeks, as the price of scrip soared, it produced a speculative frenzy that was dubbed “scrippomania.” Far from construing it as symptomatic of Hamilton’s success, Madison was appalled by this “scramble for so much public plunder.”13 Equally aghast, Jefferson wondered aloud to Washington whether “such sums should have been withdrawn from . . . useful pursuits to be employed in gambling.”14 Hamilton erred in selling most scrip in Philadelphia, Boston, and New York, feeding southern fears of a northern hegemony. In August the price of scrip touched such dizzying heights that Senator Rufus King of New York reported that business had ground to a halt as people rushed to buy scrip, with “mechanics deserting their shops, shopkeepers sending their goods to auction, and not a few of our merchants neglecting the regular and profitable commerce of the city.”15 According to Dr. Benjamin Rush, the madness engulfed Philadelphia as well: “The city of Philadelphia for several days has exhibited the marks of a great gaming house.”16 By August 11 bank scrip had zoomed from the $25 offering price to $300, with government bonds also touching delirious new heights. When bankers drained credit from the market, speculators dumped their scrip, the bubble burst, and prices plummeted. Hamilton steadied the market by buying government securities, but Jefferson was convinced that scrip had already worked its evil influence. “The spirit of gaming, once it has seized a subject, is incurable,” he wrote.17
The speculative fever abated temporarily, and Hamilton had to counter an organized effort to revive it. His friend William Duer, recently departed as assistant treasury secretary, had hatched a plan to corner the market in government bonds and bank shares and enlisted Alexander Macomb, a wealthy merchant, to join the effort. What made this situation so distressing for Hamilton was that he had just tapped Duer as governor of the SEUM, where Macomb was also a governor. The two men emerged as ringleaders of a speculative clique known as the Six Per Cent Club because they tried to manipulate the price of government bonds yielding 6 percent.
In early 1792 financial markets grew feverish as the creation of several new banks spurred a mania for bank shares. “Bancomania” surpassed even the “scrippomania” of the previous summer. Hamilton was staggered by the disorder: “These extravagant sallies of speculation do injury to the government and to the whole system of public credit by disgusting all sober citizens and giving a wild air to everything.”18 Far from seeing Hamilton as trying to restrain Duer, Jefferson believed they were in cahoots and warned Washington that the financial mania was not only “destructive of morality” but had “introduced its poison into the government itself.”19 The fight over financial policy was fast becoming a fight over the proper direction of the country; Washington was caught in the blazing crossfire between his brilliant treasury secretary and his equally brilliant secretary of state.
After bank shares attained giddy levels in January 1792, they began to slide, creating a crisis for Duer, who had borrowed scandalously large amounts from New York creditors. “Widows, orphans, merchants, mechanics, etc. are all concerned in the notes,” Hamilton’s friend Robert Troup informed him.20 By March 9, with bank shares plunging, Duer stopped payment to creditors, with catastrophic repercussions. Two dozen financiers went bankrupt the next day, and Duer was packed off to debtors’ prison, as much to protect him from angry mobs as to punish him. Feeling grimly vindicated, Jefferson gloated over the mayhem, writing that “the credit and fate of the nation seem to hang on the desperate throws and plunges of gambling scoundrels.”21 Hamilton again restored order to the market by purchasing gove
rnment securities, but the damage to his reputation had been done, especially when it surfaced that William Duer had raided the SEUM coffers for speculative funds. In the National Gazette Freneau seized this chance to revile the Hamiltonian system, which he blamed for “scenes of speculation calculated to aggrandize the few and the wealthy, while oppressing the great body of the people.”22 In this situation, neutrality was not an option for Washington, who would be forced to choose sides between Hamilton and Jefferson.
ALTHOUGH WASHINGTON had originally planned to resign during his first term, many Americans could not imagine another president and automatically assumed he would stay in office indefinitely. Whatever their quibbles about his policies, citizens still honored his exalted character and place in history. As Lund Washington wrote from Virginia, “No person has an idea but that you must remain at the head of the government so long as you live.”23 It wasn’t the first time Washington became the captive of a position from which he could not extricate himself. Once again, as the indispensable man in a crisis, he was held hostage to events. Further signs of aging were visible in the craggy face, the whitening hair, the slightly stooped gait.
On February 21, 1792, the eve of his sixtieth birthday, Philadelphians toasted him with an exuberant celebration, throwing a fancy ball in his honor and draping huge transparencies over buildings inscribed with the words “Vive Le Président.” Amid the growing strife in American politics, the public was gripped by a pervasive fear that Washington might serve only one term. Tobias Lear articulated the widespread sentiment: “I fear more from the election of another president, whenever our present great and good one quits his political or natural career, than from any other event.”24 Protective of her husband and well aware of the grave medical problems that punctuated his first term, Martha Washington hoped he would decline a second.
