The Great Divide

by Thomas Fleming

  On April 17, 1792, a gloating Thomas Jefferson reported that in New York “bankruptcy is become general, every man concerned in paper being broke.” Jefferson estimated that the total loss was $5 million, roughly the value of all the buildings in the city. It was the equivalent, Jefferson said, “of the whole town [being] burnt to the ground.” Less well-known is the role Jefferson played in this collapse. He was on a five-man committee that had to approve Hamilton’s withdrawals from the sinking fund. Jefferson relentlessly disapproved of all the withdrawals. When one of the committee members was absent, the Secretary of State persuaded Attorney General Randolph to join him to prevent withdrawals for several days.7

  The Secretary of State’s delight in the crash was the signal for a ferocious onslaught upon Hamilton by Jefferson’s followers. In the National Gazette, Philip Freneau assailed the funding system as evil. He blamed it for “the scenes of speculation calculated to aggrandize the few and the wealthy, while oppressing the great body of the people.” There was more irony than fact in this wild-eyed claim; most of the few and wealthy were losing their collective shirts. Never hesitant about replying to critics, Hamilton blasted back under numerous pseudonyms, accusing Jefferson of being behind these assaults.

  Another series of letters in Freneau’s newspaper assailed the Society for Useful Manufactures. Alas, for the immediate future of American industry, the S.U.M. was an easy target. Its treasury was depleted by Duer’s illegal transfers into the speculative whirlwind. Many of its board of governors were either in debtor’s prison or in hiding, and the few who showed up for meetings nursed grievous financial wounds inflicted by “The Six Percent Club.” The S.U.M. was soon in its death throes.

  Thanks largely to new infusions from Hamilton’s sinking fund, New York City rode out Jefferson’s apocalyptic predictions of doom. Stability and calm slowly returned to the stock market and the city. “Trade of every kind begins to be carried on with spirit and success,” reported a New York paper. But the 1792 congressional elections would show that a majority of the voters shared Mr. Jefferson’s disgust with the behavior of William Duer and his friends.

  While Duer was perpetrating the nation’s first stock market crash, President Washington received three anonymous letters, warning him that Thomas Jefferson was scheming to succeed him as president—and detailing James Madison’s role as pretended friend and secret foe of the administration. One letter focused on Jefferson’s role as a critic of the President’s military policy. “Behind your back,” the writer declared, “he reviles with the greatest asperity your military measures and ridicules the idea of employing any regular troops…His doctrines are strongly supported by his cunning little friend, Madison.”8

  Another letter told the President about the way Philip Freneau had been hired as a translator by Secretary of State Jefferson to help the poet launch the National Gazette. The writer described Jefferson and Madison as secret patrons of Freneau’s paper. Their goal was twofold—to “destroy Mr. Hamilton” and make Washington “odious.”

  The fact that the President saved these letters and included them in his papers after he left the presidency reveals a side of his personality that few people have considered. There has been a tendency to view President George Washington as a new edition—almost a different man from the victorious general. On the contrary, there is an essential continuity between the politician and the soldier who won the Revolutionary War. One of General Washington’s crucial talents was his shrewd use of spies and intelligence reports to help him counter the enemy’s plans. Saving these letters suggests the President had decided their information might be authentic.

  The President did not mention the letters when Secretary of State Jefferson visited him with a request to transfer the postal service to his department. The service was currently under the Treasury’s control, because it was supposed to make a profit. The Secretary of State expatiated on how Hamilton’s department was already too large, with its dozens of customs officers in various ports and a large staff in Philadelphia. The President listened politely and assured Jefferson he would give the transfer serious consideration.9

  Toward the close of their conversation, Jefferson asked if Washington planned to retire at the end of his term. If so, Jefferson said he also planned to depart. This seemingly offhand remark disturbed the President. Retirement was a large decision he was privately considering. He invited the Secretary of State to breakfast the following day, and, according to Jefferson, who made notes of their conversation, Washington talked frankly about stepping down.

  The President pointed out that he had just celebrated his sixtieth birthday. (The citizens of Philadelphia had given a splendid ball in his honor.) He could discern the debilitating influence of old age. His memory, never very good, was growing worse. He worried that other faculties might be faltering too, without him being aware of the decline. He found the many duties of the presidency were growing “irksome.” He yearned for the tranquility of private life at Mount Vernon. But he feared that if the “great officers of the government” departed with him, the result might be “a shock on the public mind of dangerous consequence.”10

  Washington was telling his far younger Secretary of State to stay on the job, no matter what he himself decided. But Jefferson revealed in his note on the talk that he had an even more intense desire to depart for Monticello. He was “heartily tired” of doing combat with Hamilton at cabinet meetings. He would have departed months ago, he added, but he felt a responsibility to stay and oppose Hamilton’s influence.

  Washington concluded the conversation by saying that he feared retirement might not be an option for him. There were “symptoms of dissatisfaction” with his administration that would make a withdrawal at this point seem like he was yielding to the critics. If the President was hoping to draw out the Secretary of State’s personal opinion, he succeeded beautifully.

  There was, Jefferson warmly informed him, only one source of discontent in the nation: the Treasury Department. It was responsible for “withdrawing our citizens from…useful industry to occupy themselves in a species of gambling.” His temper rising, Jefferson accused Hamilton of encouraging congressmen to “feather their nests” with government paper to guarantee their votes for his system. Now had come an ultimate act of corruption, the Report on Manufactures, creating the S.U.M. This put the Secretary of the Treasury in the business of founding corporations. If this venture was tolerated, the Secretary of State declared, it was the end of limited government. The Constitution was on its way to becoming “wastepaper.”11

  If Washington had hoped to discover whether there was anything to the anonymous letters’ warning that Mr. Jefferson was a secret enemy of the administration, he had discovered that the answer was yes. We might add that this canny maneuver suggests the President was hardly becoming feebleminded. Nevertheless, Washington still yearned to find a way to broker a truce between the Secretary of State and the Secretary of the Treasury that would enable him to return to Mount Vernon without damaging the public’s faith in the office of the presidency.

  CHAPTER 11

  The President—and the Secretary of State—Make Up Their Minds

  DURING A BRIEF VACATION at Mount Vernon in May, President Washington again began to think he might retire at the end of his first term. The impact of the imploded stock market bubble was more or less under control thanks to Secretary of the Treasury Hamilton’s intervention. Washington apparently assumed he had persuaded Secretary of State Jefferson to remain in office, and could do the same thing with the other cabinet officers, thus avoiding, or at least minimizing, a shock to the public mind.

  On the western frontier, Anthony Wayne was slowly shaping an army out of his raw recruits. How he—and they—would perform without George Washington as their commander in chief was a worry. But the President told himself he could not solve every problem before he left office, whether he served one term or two terms—or stayed for life.

  Another worry was the growth of anger
in the western counties of Pennsylvania and North Carolina at the tax Congress had imposed on the sale of their whiskey. Washington had spent enough time on the frontier to understand the sense of separation and difference that westerners felt toward the supposedly more civilized easterners. Again, this was a problem that might prove to be an unnecessary worry. Retirement still seemed to him a possibility.

  The President invited James Madison to visit him at Mount Vernon to discuss the best way to announce his decision to the nation. Instead, he found himself listening to a strenuous plea to remain in office for another four years. Nothing else would guarantee the survival of their fragile union, Madison claimed. He fretted about the “money men” of the North taking over the government, and infuriating the indebted farmers of the South, who regarded banks as dangerous, even evil enterprises. When Washington admitted that these differences seemed to be coalescing into two political parties, and the problem was creating dissension in his cabinet, Madison said that this fact only made Washington even more indispensible.

  Nevertheless, the President asked Madison to compose a farewell address and advise him on the best time to release it to the public. He suggested his advanced age and his belief in rotation in office as the best reasons for his decision. He gave Madison what the congressman called a “comprehensive” outline of the topics he wanted to cover, and soon had a very satisfactory farewell address on his desk.1

  Returning to Philadelphia in late May 1792, Washington found a letter from Thomas Jefferson, urging him in almost frantic language to serve a second term. The Secretary of State resumed his assault on Secretary of the Treasury Hamilton and his “monarchical federalist” political party. They were plotting to “change from the present republican form of government to that of a monarchy, of which the English constitution is to be the model.” The plan would inevitably split the Union; only Washington could prevent this catastrophe. “North and South will hang together if they have you to hang on,” Jefferson pleaded.2

  Back at Mount Vernon, in July, Washington invited Jefferson for a visit to discuss his letter. The President, recalling his early conversations with James Madison, told Jefferson that he originally meant to serve only two years. The unsettled state of the world and the development of political disagreements in America had forced him to change his mind. But he still felt he could and should retire at the close of his first full term—on March 4, 1793.

  When Jefferson still resisted the idea, Washington abruptly blamed Philip Freneau for a lot of the dissension that was agitating the nation. He took particular issue with Freneau’s claim that he headed a “monarchical party.” The President thought this was a ridiculous idea, without an iota of support anywhere. He took even stronger issue with Freneau’s description of him as a dimwitted puppet manipulated by Secretary of the Treasury Hamilton. In attacking Hamilton, these critics were also attacking him, Washington said.

  With not a little anger in his voice, Washington added that he was neither a careless nor a stupid president. He knew and thoroughly understood Hamilton’s financial program and approved it. During the War for Independence, he had seen firsthand what happened when America’s credit collapsed. He considered Hamilton’s restoration of this vital ingredient in nationhood almost a miracle. The country was prosperous and happy.

  If anyone was encouraging a monarchy, Washington continued, his temper still rising, it was Philip Freneau with his irresponsible attacks. Some western farmers were refusing to pay the tax on whiskey and talking of secession because the National Gazette was telling them that Alexander Hamilton was using their money to create a bloated aristocracy of stock market swindlers and gamblers. By stirring this sort of opposition to the government, Freneau was emboldening some already disgruntled anti-federalists to talk about defying the administration with guns in their hands. That might make more conservative men wonder if some form of royal rule was a necessity to save the Union.

  Was President Washington using the information from those anonymous letters to send the Secretary of State a warning about his clandestine opposition to the administration? One is tempted to consider the possibility, even the probability that this was the case. Once we discard the notion that Washington was a dimwitted figurehead—and remember his shrewd use of secret intelligence during the war—the probability tilts toward certainty. Especially worth noting is the President’s angry dismissal of the notion he was being manipulated by Hamilton. Was he covertly saying it was time for the Secretary of State to change his mind?

  Thomas Jefferson went back to Monticello a very frustrated man. But he remained convinced that he could change Washington’s mind about Hamilton’s policies. If there was one certainty that guided Jefferson in almost all the disputes of his life, it was his belief that he was more intelligent than virtually everyone else he had thus far met in his journey. James Madison seems to have been the only person to whom he ceded a certain degree of intellectual superiority.3

  Washington’s New England born secretary, Tobias Lear, took a vacation in his home region and returned to inform the President that everywhere he went, people assumed the President was going to stay for another term. They told Lear that four years was too short a time to decide whether the new government was “beneficial or not.” On the heels of this message came a plea from Attorney General Edmund Randolph, begging Washington not to retire.4

  Meanwhile, Secretary of the Treasury Hamilton was intensifying the Philadelphia newspaper war. Writing under a pseudonym like other contributors to John Fenno’s Gazette of the United States, he bluntly asked if Jefferson could explain why the U.S. State Department paid Philip Freneau an annual salary to help him publish a newspaper which specialized in vilifying “those to whom the voice of the people has committed the administration of our public affairs.”

  Four days later, the President wrote a letter to Secretary Hamilton, telling him that on his way to Mount Vernon from Philadelphia, he had asked numerous people what they thought of their government. Almost everyone had admitted they were prosperous and happy, but they were somewhat alarmed at the disputes and criticisms that had erupted about differing interpretations of the Constitution. Washington did not mention Jefferson by name. But there was convincing evidence that he was the President’s primary concern.

  The President listed the criticisms under twenty-one headings, all taken directly from the Secretary of State’s May 23 letter, urging him to serve another term. Could Secretary Hamilton find time to answer these attacks? Washington asked. The closing words of this letter were: “with affectionate regard.” We have seen how important such expressions were in his correspondence with James Madison. The words were absent in the letters he was exchanging with Secretary of State Jefferson.5

  Hamilton’s reply was another fourteen thousand-word explosion. It more than matched his defense of the Bank of the United States in the vigor of its reasoning and ingenuity of its arguments. The Treasury Secretary apologized for the “severity” of some of his statements. Many of these criticisms were “calumnies” that accused him of the “basest perfidy.” Most of the time Hamilton was factual, sometimes brutally so. At one point, he refuted Jefferson’s charge that the public debt was excessive by flatly stating that it was “created by the late war. It is not the fault of the present government that it exists.”

  Washington was pleased with Hamilton’s answers. It was obvious that the President wanted to have some ammunition handy if Jefferson again attempted to change his mind about the financial system. Simultaneously, Washington continued to urge both men to compose their differences, reiterating as his chief reason for urging a reonciliation his desire to end his public career with a single presidential term.

  The moment Hamilton read these words, he rushed a letter to the executive mansion urging the President not even to think about retirement. To leave office with so many problems and issues unsolved and undecided would reflect on his character, in the eyes of future generations. For George Washington, no more powerful argument
could be made. The only reward he had ever sought for his decades of public service was his reputation as a disinterested patriot—and a country that was prosperous and happy.

  Happiness was definitely not on the political horizon. Secretary of State Jefferson summoned two younger supporters to reply to Hamilton’s attacks on him. James Monroe, just elected senator from Virginia, joined James Madison in a series of articles in Freneau’s newspaper, defending Jefferson and lambasting Hamilton. The Treasury Secretary responded with a biting assault on other aspects of Jefferson’s character. He depicted him as a man who pretended to be a defender of the poor and oppressed while living a luxurious lifestyle. Even nastier was another essay, suggesting that Jefferson was a “secret voluptuary”—a hint that the Secretary had a hidden sexual side to his widower’s life.

  On the same day that Hamilton sent Washington his reply to the “criticisms” of the financial program, drawn from Jefferson’s letter, the Secretary of State wrote another long letter to the President. For the first time, Jefferson admitted hiring Freneau, but he told Washington that the journalist had approached him with a proposal to launch his newspaper. This was about as far from the truth that Jefferson could get in describing the week in which he and James Madison labored to persuade Freneau to come to Philadelphia. Topping this whopper, Jefferson claimed he had no influence whatsoever over the newspaper that repeatedly praised him and excoriated Hamilton.

  The Secretary of State declared that he would not allow Hamilton to “cloud” his approaching retirement with slanders “from a man whose history, from the moment in which history can stoop to notice him, is a tissue of machinations against the country which has not only received and given him bread, but heaped its honors on his head.” Were these words an attempt to appeal to Washington as a fellow Virginia aristocrat? If so, they were sadly wide of the target.