by John Ferling
During the week that New York ratified the Constitution, Jefferson learned of New Hampshire’s vote, which meant that a new federal government would be created. He “sincerely rejoice[d],” he said. “It is a good canvas, on which some strokes only want retouching.”58 Meanwhile, Hamilton had gone to work on Washington to accept the presidency. Though he had written Washington only five personal letters in the nearly four years since the war’s end, Hamilton dispatched three letters to the general within three months of New York’s vote to ratify. He believed that Washington’s presence was crucial to the success of the new government, and he secretly wanted to be part of a Washington administration.59
Washington was conflicted. He would be fifty-seven when he took office, and he feared that he had little time left. He wanted to spend as much of that time as possible at Mount Vernon. Moreover, if he failed as president, the colossal reputation he had won during the war might be destroyed. There was also an element of posturing to Washington’s behavior. He did not wish to be seen as eager to possess power. He wanted to be asked, begged even, to accept the presidency. The newspapers were filled with essays imploring him to become president, and many people wrote to beseech him to come out of retirement. Hamilton was among those who wrote, and he understood the way Washington thought better than anyone. Washington ran a “greater hazard to that fame … in refusing” to serve than he would by serving as president, Hamilton said. Should the new government fail while he sat on the sidelines, he continued, the people would attribute the failure to his dereliction. Those were the magic words. Washington almost immediately agreed to serve as president, and in February 1789 he was unanimously chosen by the Electoral College, as all knew would be the case.60
Four months after learning that the Constitution had been ratified, Jefferson asked for a leave of absence to return to Virginia, but his wish to come home was unrelated to ratification. After Patsy had alarmed him by speaking of becoming a nun, Jefferson had initially planned to come home in 1788. He wanted his daughter, who turned sixteen in September 1788, to marry, and to marry a Virginian, but he delayed requesting a leave for a year so that Polly, his youngest child, could “perfect herself in French.”61
A second concern drove Jefferson home, though he mentioned it to no one. He had fallen into debt, and was just beginning to understand his predicament. Jefferson’s problem had its origin in his decision to accept what John Wayles had bequeathed to his daughter, including considerable debts that were owed to overseas creditors. Jefferson had understood the risk, but he presumed that the debts could be retired through marketing the tobacco that grew abundantly on his properties and Wayles’s Tidewater lands. But the Revolutionary War wrecked the tobacco trade. Nor did peace help. Not only did the Treaty of Paris stipulate that creditors were to meet with no impediments in the recovery of prewar debts, but also Britain’s discriminatory trade policies were ruinous for tobacco planters. In mid-1787, Jefferson first spoke of the “torment of mind” caused by his indebtedness.62 Thereafter, he began thinking of coming home to take charge of, and possibly rethink, operations at Monticello and his other properties.
Believing that he could restore order to his affairs quickly, Jefferson envisaged being back in Paris within six months. It was his plan—his hope—to remain in France for several more years, continuing his diplomatic mission, watching history unfold in the French Revolution, and, possibly, learning whether he had a future with Maria Cosway. Ten months elapsed before Jefferson was informed that his leave had been granted. Three weeks prior to that he had received a letter from Madison (penned shortly after Washington had assumed the presidency) that included an unsettling question: “I have been asked whether any appointment at home would be agreeable to you.”63
Madison’s query meant that he might never get back to Paris. At the very least, it probably meant that on his arrival in Virginia Jefferson would face an unpleasant choice of accepting or rejecting an office offered by Washington.
Jefferson departed Paris late in September 1789, though another month elapsed before his vessel, the Clermont, began its Atlantic crossing. His traveling party included his two daughters, the Normandy shepherd he had acquired in Paris, and his two slaves, James and Sally Hemings. Sally, now sixteen, may have been pregnant, as she supposedly later averred. Some historians believe that she was pregnant and that the child she was carrying was Jefferson’s.64 If so, Jefferson may have learned of her condition at the beginning of September, for at that time he suffered a migraine or cluster headache, his first in more than five years. Or, the malady may have been the result of a case of nerves triggered by his recent receipt of a missive from Maria Cosway beseeching him to stop in London. “T’is very cruel of you,” she wrote, not calling on her, to which she added: “Pray take me” to America.65
Whether or not Jefferson had any inkling, he was on the cusp of striking life changes.
The Struggle to Shape the New American Republic
Chapter 9
“The greatest man that ever lived was Julius Caesar”
The Threshold of Partisan Warfare
Hamilton and Jefferson might have met in 1783 during the couple of months that both were in Philadelphia. It is certain they met in 1790, and during the next few years each was obsessed with the other.
During the winter and spring of 1789, while Jefferson was watching the frenetic early events of the French Revolution and awaiting permission to return to Virginia for a brief stay, Hamilton anxiously awaited the commencement of Washington’s administration. Washington had been unanimously elected on the first Wednesday in February. John Adams received the second greatest number of electoral votes—he polled thirty-four to Washington’s sixty-nine—and was to be the vice president. On April 14, Washington received official notification of his election. It was not a surprise. His bags were already packed, and in short order he was on his way to New York, home of Congress and, for the time being anyway, the capital of the United States. Despite the unambiguous concerns of many that the Constitution had created a presidency with a distinctly royal hue, Washington’s journey northward from Mount Vernon befitted a monarch. Large crowds turned out to cheer him in hamlets and cities along the way, nearly every one of which feted him with some sort of regal ceremony. In Trenton, for instance, a girls’ chorus serenaded him with a composition that rang out “Welcome, mighty Chief.” Fully half the residents of Philadelphia lined the streets to cheer and to see the most famous American.1
Between September, when Hamilton had written beseeching Washington to serve as chief executive, and the president-elect’s arrival in New York in April, the two had no contact. They may not have met prior to Washington’s inauguration of April 30, but Hamilton was present at Broad and Wall Streets, the site of Federal Hall—New York’s city hall, recently remodeled and given to Congress—when the oath of office was administered. He also attended Washington’s inaugural ball a week later, and the president danced with Betsey, who found him to be grave and formal even in this relaxed environment.
Around the time he took office, Washington solicited advice on the “etiquette proper to be observed by the President.” Adams and Hamilton were among those he approached. Both stressed the need for dignity, though Adams recognized that each president would behave differently according to his character and temperament. Encouraging Washington to shoot “for a pretty high tone,” Hamilton urged behavior worthy of royalty: the president should receive guests at a formal weekly levee (the term used in European monarchies for royal receptions), but he should not linger more than thirty minutes; he was to host “formal entertainments” up to four times annually, though he should never “accept invitations” to visit the homes of others; he might occasionally invite six or eight congressmen or “other official characters” to dinner, but he was “never to remain long at table.”2
Having spent years in the general’s presence, Hamilton knew that his recommendations would be an ideal fit for Washington. Washington was customarily distant, so
lemn, and reserved. Predictably, his presidency rapidly took on a monarchical air. He was attended by servants in livery and wigs—mostly slaves brought north from Mount Vernon—traveled in a varnished, cream-colored carriage drawn by several horses and adorned with his family coat of arms, and presided over stuffy levees and dinners, occasions when he stiffly bowed, but never shook hands. The British minister, who knew royalty when he saw it, remarked that Washington was “very kingly.” Those who were most conservative relished the tone that Washington set, seeing him as “a king, under a different name,” as James McHenry put it, and at times when Washington appeared in public they had a band strike up “God Save the King.” Not a few were put off by the royal trappings, though open criticism of Washington was a long time coming.3
Everything about the executive branch, about the entire federal government, was new territory. Months passed after Washington’s inauguration before Congress created the last department. Congress was distracted with other business, including hashing over amendments to the Constitution to satisfy the Anti-Federalists and enacting an impost of 5 percent on imports, the revenue-raising measure the Nationalists had sought since 1782.
When Congress finally got around to the executive departments, it more or less simply replicated the three that had existed—War, Foreign Affairs (renamed “State”), and Finance (henceforth to be called “Treasury”). Its one substantive change was that whereas the president was to determine the duties of the secretaries of war and state, the secretary of the treasury was to report to Congress.4
Washington typically made decisions slowly, though he wasted little time in asking Henry Knox to continue in his post as secretary of war. How Washington came to his choice of a treasury secretary is not clear. Tales later circulated that he first offered the position to Robert Morris, who declined and recommended Hamilton. That unsubstantiated yarn is highly suspect. Though popular with northern, urban Nationalists, Morris was disliked—“hated” might be a better word—in many other circles. Washington fostered a persona of being above politics, but he was an adroit politician who was not about to taint his administration with one as widely despised as Morris.
Actually, the president probably settled on Hamilton early on. Washington had not been in office a month before Madison wrote to Jefferson that New York’s Robert R. Livingston wanted the position, but that Hamilton, who was “best qualified for that species of business” and had considerable support among merchants and financiers, was the favorite.5 Washington remained silent, however, until the Treasury Department was created by Congress early in September, at which time he nominated Hamilton.
Washington was drawn to Hamilton for numerous reasons. Despite the tension between them, Hamilton had been scrupulously loyal, always a selling point with Washington. The president once claimed to have never spoken with Hamilton about economics before 1789, but that stretches credulity. General Washington’s habit had been to frequently surround himself with his aides at the end of the workday, and every conceivable subject was fair game for discussion. Given the often sad state of the army from 1778 onward, it is hard to imagine that Hamilton, who was publishing essays on the nation’s financial woes, had not expounded on economics during those sessions. Whether or not he had, it seems probable that as far back as 1780 Washington had heard others tout Hamilton’s expertise in economic matters.
No one was a better judge of others than Washington, and having spent five years with Hamilton at headquarters, corresponded with him, likely read some of his published essays, and seen him in action at the Philadelphia Convention, the president knew him well. Many who came into contact with Hamilton were appalled by what they found. But Washington admired him. Washington was aware that Hamilton was a dreamer, an intriguer, a polemicist, a relentless avenger, and a veritable storehouse of ideas; he knew, too, that Hamilton was fluent, persuasive, and nearly unequaled in guile, political dexterity, and his capacity for work. Hamilton, as Washington must have known, usually found a way to win approval of what he wanted, even if he had to scheme and conspire. Washington recognized that Treasury post was going to be both a pressure cooker and, next to the presidency, the cockpit of the new national government. The recommendations of Treasury would determine much about the shape of the new American nation, the lives of its citizenry, and the nature of its politics. Above all else, Washington was cognizant of what Hamilton wanted, and it was what he wanted. Both longed to make America what some historians have called a “fiscal-military” state, a nation with the capability of marshaling wealth and utilizing the power brought by wealth for military means.6 Washington may not have known all the economic steps that had to be taken to get there, but he knew that Hamilton did.
Hamilton’s appointment was approved by the Senate on the same day that it was submitted. Intent on avoiding all charges of iniquity, Hamilton immediately gave up his law practice, and as he owned no securities (he had only a small investment in a western land company and that single share of bank stock), he left himself without a private source of income. Neither President Washington nor any other member of his administration or of Congress did such a thing. Hamilton planned to live on his salary of $3,500 annually, a very handsome income, some ten times that of most experienced tradesmen, but considerably less than he had been earning in his legal practice.
One week after he took office, the House of Representatives gave Hamilton a deadline 110 days away to prepare a plan for coping with the nation’s indebtedness. Now thirty-four, he worked daily throughout that autumn to complete his Report on Public Credit, often toiling deep into the night in his tiny, unadorned office. A foreign visitor described Hamilton, in “a long gray linen jacket,” working at a pine desk covered with a simple green cloth; files were strewn about, the guest said, and the few items of furniture in the office could not have cost more than ten dollars.7 The ideas that went into his report were not especially new, though they had to be substantiated with evidence, and he had a comptroller, assistant secretary, and thirty clerks to help with the research. (Counting inspectors, revenue collectors, and assorted other officials, the Treasury Department consisted of about 350 employees, nearly ten times the number allotted to War and State.) Clearly, Congress saw indebtedness as the nation’s greatest problem.
Hamilton’s forty thousand word report submitted in January 1790 was the first accurate reckoning of the extent of indebtedness. The debt of the United States totaled about $52 million. Roughly 20 percent of it—$11.6 million—was owed to foreign nations (nearly 15 percent of that in arrears of interest), while the remaining obligations were to the holders of bonds, IOUs, and currency issued by Congress and the army. Hamilton calculated the debts owed by the states to be $25 million. He estimated the total federal and state debt at a par, or face, value of $79 million. The figures provided by Hamilton were not surprising. Nor was anyone startled to learn that the annual interest payments on the national debt exceeded the revenues of the federal government. However, some were taken aback by two aspects of the plan he proposed for dealing with the debt. First, he called for the United States to assume the debts of the states, a notion that had not been widely bandied about prior to 1789. Second, instead of proposing that all indebtedness be retired, he recommended that the new federal government “fund” it—today, it would be called “refinancing”—which is to say that Hamilton urged the creation of a new debt through which to pay off the old.8
After years of rhetoric about a debt crisis, Hamilton had called for making the debt permanent. His idea was that new federal securities would be issued, replacing the total principal of all old securities. Investors would purchase these securities—hence they would become creditors who were making a loan to the United States—and the revenue raised from their sale would go toward retiring the old debt. The new bonds that Hamilton proposed would never mature, their average interest rate would be about 4 percent, and their holders were to receive from the Treasury a specified dollar amount annually.9 The funding scheme that Hamilton rec
ommended was not unheard of. It was an idea that had been discussed years before in Morris’s day.
However, neither funding nor the assumption of state debts had been noised about during the campaign for the Constitution. Some of Hamilton’s scheme was not as apparent then as now, or as it would come to be before the decade ran its course. He believed that consolidating state and national indebtedness would exhibit the power of the federal government. (He had said in The Federalist that the more the government engages in matters “which touch the most active springs of the human heart, the greater … it will conciliate the respect and attachment of the community.”)10 More important, Hamilton wished to attach the wealthiest Americans—those who could afford to purchase Treasury securities—to the new national government. He knew that nothing would strengthen the government more than the loyalty of wealthy and propertied creditors. That, in turn, would enhance America’s credit rating and entice European investors. Finally, although Hamilton remained silent on this point, he saw consolidation and funding as merely the first step in a calibrated formula that would transform America into a powerful national state capable of defending itself and expanding its boundaries.
Jefferson had not stopped in London to see Maria Cosway, and after a twenty-six-day crossing, he landed at Norfolk late in November. On disembarking, Jefferson learned that Washington had nominated him to be secretary of state and that the Senate had already confirmed the appointment, even though he had not been consulted. Less mystery surrounds Washington’s selection of Jefferson than his choice of Hamilton. Only four men had been major players in American diplomacy, and Washington easily eliminated two of them: Franklin was now eighty-three and Adams was the vice president. The third was John Jay, who had been in charge of foreign policy since shortly after the war ended. But like Hamilton, Jay was a New Yorker. Washington could not have two New Yorkers and no Southerner in his cabinet. The president nominated Jay as chief justice of the Supreme Court and turned to Jefferson, his fellow Virginian.11
