Archive for the ‘Constitutional period (1789-1809)’ Category

During the first decade the United States lived under the Constitution, Alexander Hamilton (on the left) was a political force.  In fact, one could go so far as to say he was the second-most powerful man in the country, a rung or two below President Washington.  A good number of men loved and respected him (including the first President), and a good number loathed and reviled him (including the second, third, fourth, and fifth Presidents) .  But no one could argue with the presence and influence the country’s first Treasury Secretary enjoyed.  If you’ve spent any time on the pages of Today’s History Lesson, you know that to be true.  His legacy, now nearly two-and-a-half centuries in length, still lives with us.

During the second decade, Hamilton’s power began to dwindle.  Some of that was his own fault, some not.  Clearly, the Federalist party (to which Hamilton belonged) was falling out of favor, wilting under the pressure of an Anti-Federalist party led by Jefferson and Madison.  Federalists were under constant attack and in those days, before the “gentleman’s press” had come into being, those attacks were vicious and in numerous cases, untrue.

But Hamilton’s own indiscretions hadn’t helped his situation.  His affair with Maria Reynolds had been made public in the late 1790s, causing him to offer up a well-intentioned, but ill-advised public apology.  Then there was the even more ill-advised attack on President Adams (a fellow Federalist), published in the newspapers shortly before the 1800 election.  At this point, he was still hated by Anti-Federalists, but a good number of Federalists were keeping their distance as well.

By 1804, Hamilton was doing very well in his law practice, but struggling mightily for political significance.  The upcoming governor’s race in New York provided Hamilton with chance to gain some ground.  Aaron Burr (on the right above), the current Vice President, had decided to run for the position.  Of course, the feud between Hamilton and Burr needs no introduction around here.  Hamilton was incredibly worried that Burr would win, so he drafted a letter to his close friend Rufus King, currently the ambassador to England, asking him to run.  Hamilton knew that King might not be able to win the election outright against the firmly entrenched Clinton machine, but maybe he would siphon off enough “Burr” votes to prevent his arch-enemy’s victory.

On the day he wrote the letter, February 23, 1804, Hamilton became the center of attention again, and again, for all the wrong reasons.  The “Clinton machine”, led my New York governor George Clinton (another bitter rival of Hamilton’s), began circulating the report that, way back in 1787 (during the time of the Constitutional Convention), Hamilton and John Adams (then the ambassador to England) had negotiated with King George III to create an American monarchy with one of George’s sons as king.  In return, England would give up Canada, Nova Scotia, and other land holdings.

The story was utterly false.  Yes, both Hamilton and Adams had made statements in the past that, taken on their own, could be seen to favor a monarchical government.  But each man’s overall body of work clearly showed that neither, under any circumstance, wanted to return to that form of rule.  And having England in control of America in any way, shape, or form, was anathema to both men.  But the timing of the story was perfect, as Hamilton was beginning to gain a bit of political traction via his law practice.

Without letting go of his current work, Hamilton began tracing threads to determine the story’s originator.  He was a man that, above all else, treasured his own honor.  People began to detect the smell of gunpowder in the air and pistols at ten paces.

Hamilton was in the thick of it again.  Dates are a bit fuzzy, but I’m going to try put together a proper conclusion to this story on the proper day.

Recommended Reading:  Duel:  Alexander Hamilton, Aaron Burr, and the Future of America – A good composite read on the feud between these two powerful men.  It starts a bit slowly for my tastes, but finishes with a flourish.

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James Callender.  The name probably means little to you.  The name meant nothing to me until I started reading about this country’s Founding Fathers a few years back.  But you would certainly know the type of man he was if I gave you just a one-word description.  That word, first used by Theodore Roosevelt in the early 20th century (as I learned on Jeopardy a few days ago), is “muck-raker”.  Wait, is that two words?  One word?

Whatever, James Callender was a muck-raker.  In his biography of Alexander Hamilton, Ron Chernow describes him as a “hack writer“, an “ugly, misshapen little man who made a career of spewing venom.”   He spent most of his life doing it and, as we’ll soon see, his life ended in muck.  That’s the kind of guy he was.

He arrived in the United States, having left Scotland, in the early 1790s.  Well, “left” is something of a euphemism…”got out of town in a hurry” is more apt, fleeing the country to escape a sedition rap from the British government.  It didn’t take him long to anger folks on this side of the pond, either.

He got in with Republican interests early on, landing a job with Benjamin Franklin Bache’s newspaper, the Aurora.  Firing darts at Federalists like Washington, Adams, and Hamilton made him really good friends with Republicans like Jefferson.  In fact, our third President called Callender “a man of genius” and “a man of science fled from persecution.”

It was all tea and crumpets when James Callender released History of 1796, a pamphlet which exposed to the public a scandal involving “the prime mover of the federal party.”  He enticed his audience by writing that “we shall presently see this great master of morality, although himself the father of a family, confessing that he had an illicit correspondence with another man’s wife.”  He then went on to publish all the papers concerning Alexander Hamilton’s affair with Maria Reynolds.  These were the accounts Hamilton had given to James Monroe, Frederick Muhlenberg, and Abraham Venable.

As we remember, these three men approached Hamilton because they believed the Treasury Secretary was involved in some sort of financial corruption with James Reynolds.  When he buried them with the details of the affair and the extortion, the men left knowing that Hamilton, while acting immorally, was not acting illegally.  Of course, Callender paid no attention to niceties like the truth, and published the corruption stuff anyways.

But Callender was an equal-opportunity muck-raker.  In 1802, he broke another story, this one about the relationship between President Jefferson and one of his slaves, Sally Hemings.  It was probably at this time that Jefferson’s opinion of James Callender changed from that of a man of science to “hypochondriac, drunken, penniless, and unprincipled.

And then there was the court case in 1803.  The People vs. Croswell involved Harry Croswell, a publisher charged with libel who claimed that Thomas Jefferson had paid Callender to defame President George Washington.  Of course, that meant that James Callender would likely be called to the witness stand.  He never made it.

On July 17, 1803, his body was found in the James River.  Apparently, he was in a drunken stupor and drowned in three feet of water…or did he?  History is unclear.

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When President Washington took the oath of office for the first time, political parties didn’t really exist.  Well, they sort of did, in the sense that groups of people (and therefore, groups of politicians) held different views of how this infant governmental experiment should work.

By the time John Adams had taken office, there were two pretty well-defined parties, the Federalists and the Anti-Federalists.  What’s rather humorous is that members of each party still believed there was only one party…their own.  The other party was considered to a break-away faction, a group of naughty boys that needed a good spanking to be brought back in line.

When Jefferson’s tenure as President ended, members of the two parties pretty much wouldn’t talk to each other about their differences.  The divide was growing more pronounced.  These days, Republicans and Democrats in Congress squawk at each other from the relative safety of the microphone and dais.  In Jefferson’s day, opposing politicians occasionally fought each other with fists, and “pistols at 20 paces” wasn’t out of the question.

Against this backdrop, James Madison took office as the fourth President.

The First Lady, Dolley, wasn’t much into the whole fighting thing.  In fact, she wasn’t a fan of conflict at all.  But she liked to entertain and, apparently, she liked to decorate as well.  And both of these came together quite nicely on this day in history.  When the Madisons moved into the White House, it was entering its second decade of service to the First Family.  They decided the place could use some sprucing up.

The process of redecorating began and, as the end of May approached, enough progress had been achieved for Dolley to plan something of a party.  On May 31, 1809 (which happened to be a Wednesday), guests were treated to the first White House “drawing rooms” gathering.

In his biography of James Madison, Ralph Ketcham described the occasion.  “Congressmen and their wives, socially prominent Washingtonians, visiting belles, and foreign emissaries crowded the White House rooms for a glimpse of the new furnishings and the new presidential pair.  Military music filled the house, and the guests helped themselves from buffets loaded with punch, cookies, ice cream, and fruit.

Here, members of opposing political viewpoints actually put their differences aside to engage in pleasant conversation while listening to music and eating their favorite goodies.  It helped to build a bit of camaraderie between highly volatile factions.  In her biography of the fourth First Lady, Catherine Allgor goes so far as to say, “If for no other reason than this, the drawing room contributed to the construction of a workable government.”  That may be a bit of an overstatement, but clearly, men were more civilized in their dealings with each other.

The event was a tremendous success, and Dolley was roundly praised for her elegance and hospitality.  The Wednesday “drawing rooms” became a regular occurrence.  A single room came to be the State Dining room and the attached parlor (today’s Red Room) along with another room.  Over time, attendance mushroomed to several hundred guests and a new, possibly more appropriate name – “Wednesday Squeezes” – came into being.

The Wednesday event continued until the White House was burned by the British…on a Wednesday.  The story goes that Dolley was awaiting the arrival of guests when word came that the list be dominated by a gaggle of British soldiers.  She grabbed what she could, left the dinner on the table, and got out.

Recommended Reading:  A Perfect Union:  Dolley Madison and the Creation of the American Nation

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It wasn’t the White House, because it didn’t yet exist.  It was the Capitol building, because it didn’t yet exist, either.  And it wasn’t even Washington, D.C. because, well, that property still belonged to the states of Maryland and Virginia.  But when we think of a Presidential inauguration, all of those places are usually top of mind.  In 1789, however, they were completely out of mind.  So New York City provided the locale, and City Hall provided the venue for the very first Presidential inauguration.

George Washington was a very nervous man; probably way more nervous than when he had spoken his wedding vows.  He had been unanimously nominated to lead a new country with a new charter and a completely new form of government.  He had spent the winter talking about how he was unqualified to lead, even while the country believed, almost without exception, that he was the most capable man to do so.  His wife, Martha, didn’t really look forward to being First Lady.  In fact, in his biography of the First President, Ron Chernow writes that Mrs. Washington “talked about the presidency as an indescribable calamity that had befallen her.

Regardless of feelings, there was no backing out now.  Vice President Adams, in front of the First Congress, turned to the President-elect and said, “Sir, the Senate and the House of Representatives are ready to attend you to take the oath required by the constitution.

Washington stepped out onto the balcony shortly after noon on April 30, 1789 to an immense roar and took the oath.  Though not required, a committee thought it appropriate, at the eleventh hour, to have the President place his hand on a Bible.  But where to find one?  In the end, a local Masonic Lodge provided its Masonic Bible and Washington was administered the oath.

Then the President addressed the crowd.  Again, this was not required by the Constitution, but it seemed right.  Washington’s original speech, written by David Humphreys, spent too much time defending his decision to accept the Presidency.  It spent too much time talking about his faith in the American people (not necessarily a bad thing).  It spent too much time downplaying any form of dynasty (Washington was childless, after all).  It delved too close (and again, at too great a length) to legislative matters for executive branch comfort.  In fact, at seventy-three pages, it spent too much time on everything.

When Washington sent the speech to James Madison for his thoughts, he promptly tossed it out and wrote a much more succinct address that steered clear of legislative issues, which the President readily accepted and delivered.

Washington had become a household name in the Colonies during the French and Indian War.  He had become the hero of the American Revolution.  He had been a calming force (though he barely spoke) at the critical and sometimes contentious Constitutional Convention.  And now he was the President, chosen by the people (by a wide margin) and the Electoral College (by unanimous consent).

Recommended Reading: Washington – A Life

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The French Revolution, which began with the 1790s, was seen by many American citizens as a chance for another country to throw off the shackles of tyranny.  After all, the Colonies had, in the previous decade, successfully removed British control.  The idea of the French doing the same had big appeal in the Colonies-turned-States.

But as we know, this upheaval quickly turned from “Revolution” to “Reign of Terror”, and fall of the guillotine’s blade became more common than sunrise and sunset in France.  Thousands of the nation’s leaders were slaughtered and tens of thousands of its civilians massacred in a display of countryman-against-countryman butchery that has been rarely duplicated in history.

King Louis XVI was beheaded in January 1793, his head and body stuffed in a basket, then eventually buried in a box.  One executioner began an impromptu business, selling bits of the King’s hair and clothing, as schoolboys cheered and licked the King’s blood.  Make no mistake, the American Revolution was about freedom, and the French Revolution was a disgusting display of man’s basest inhumanity and brutality.

England watched from across the Channel in horror.  William Pitt the Younger called the King’s execution “the foulest and most atrocious act the world has ever seen.”  France’s response?…a declaration of war on February 1.  News travelled slowly back then, and word of war didn’t arrive in America until early April, but it was immediately felt in the States, as pro-British and pro-French elements took their sides and waited for the government to make its position known.  President Washington very quickly (and very wisely, in my opinion) acted and, in April, offered up the Proclamation of Neutrality.  America would not take any side.

But in between the arrival of the news of war and the government’s decision to remain neutral, there was another arrival…this one in Charleston, South Carolina.  On April 8, 1793, the French Minister to the United States arrived aboard the frigate Embuscade.  His name?…Edmund Charles Genet.  But, as Chernow writes, “he would be known to history, in the fraternal style popularized by the French Revolution, as Citizen Genet.

For those with British sympathies, Genet was their worst nightmare.  For anyone siding with the French, here was a man to greet with effusive praise and much regailment.  Genet’s pomp and arrogance not only made him an incredibly polarizing figure, it also meant he was “all the news” for a while.  And that made it easier for the Frenchman to move about and peddle his influence, for Citizen Genet didn’t come to America to escape the Reign of Terror.  This man had an agenda.

And over the course of the next year or so, his disregard for American authority and American foreign policy, which under most circumstances was likely treated as sedition, would cause no end of trouble.

We’ll check back in on Citizen Genet again…trust me.

Recommended Reading: Alexander Hamilton

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Well, it’s been quite a while since I last put fingers to keyboard, but I’ve got a good excuse.  We took a vacation to Clearwater Beach, Florida.  I actually took the laptop with me, figuring I’d have time for a bit of work and maybe bit of typing.  Such was not the case.  The weather was absolutely perfect (bright sunshine, blue skies, beautiful beaches, and temperatures in the 70s), the condo was fabulous, and there were plenty of things to do.

I love to eat fish, and being on the Gulf meant there was plenty to be had…all of it was great.  But then we found The Gondolier, an East Coast chain that specializes in pizza.  Their food was outstanding…so good in fact that on our last evening, we simply went back there a second time.  Had we tried that place first, we may have eaten every meal there.  If we go back to Clearwater (and that’s a pretty serious possibility), we may do just that.

The long and short of it is that the laptop stayed mostly parked on the dresser.  But now we’re back to reality (and single-digit temperatures), so I’m hoping to get going this year.  Last year averaged fewer than eight pieces per month, so I’d like to improve on that.

“On January 20, 1791, a bill to charter the Bank of the United States for twenty years virtually breezed through the Senate.”

It’s a pretty simple statement taken from Chernow’s biography of Alexander Hamilton, and one that’s easy to just gloss over because we’re so used to banks in the 21st century.  We have banks of every shape and size on nearly every corner.  We can bank online, at the teller window, in the lobby, at an ATM machine, or on a smartphone.  Banks are as common as grocery stores.

In the 18th century, that was not the case.  And while there are people today that don’t trust banks and bankers, 18th-century opinions against the banking system was almost violent.  For Founders like James Madison and John Adams, their political differences found common ground in their opposition to banks.  Jefferson wrote, “I think our governments will remain virtuous for many centuries as long as they are chiefly agricultural…”  He would describe banks as “an infinity of successive felonious larcenies.”

For those against, banks were seedbeds of corruption and vice, turning honest men into money-hungry, money-grabbing monsters.  I think of a bank as a place to store our money safely and earn a bit of interest.  Men like our third President, through the lens of the 1780s, saw it as an oppressor of the poor and a creator of a class-based society…somewhat ironic considering Jefferson’s adherence to slavery despite his vocal abhorrence of the practice.

Some would say that Jefferson and Madison and Adams and those on their side were somewhat backwards in their stance.  Sure, America was largely agrarian now.  But was agriculture the only industry with a future in brand-new America?  Manufacturing and heavy industry, while not a major force at the time, would certainly increase in importance.  They required large amounts of capital to get started…the kind of capital only a bank could hold.  Furthermore, a national bank would help establish credit with other countries as well as manage and reduce the nation’s outstanding debt.

But for James Madison, it went beyond class and oppression and ended at the Constitution.  Alexander Hamilton had authored the idea of the bank using that most famous little piece of our founding charter…Article 1, Section 8.  We know it best as the “necessary and proper” clause.  It gave (and still gives) Congress the power to pass legislation “necessary and proper” to exercise its delegated duties.  Madison didn’t see a bank as “necessary”.  Nice?…maybe.  Convenient?…maybe.  Necessary?…absolutely not.

Madison had argued for the Constitution’s elasticity when writing pieces for The Federalist, but he believed a national bank pushed that elasticity beyond the breaking point.  Many agreed with him.  Hamilton had also argued for flexibility in the Constitution and believed the bank fit nicely under that clause.  And more Senators agreed with him than with Madison, so the bill passed the Senate.

Curious about the bank’s ultimate claim to fame?  How about the party system we enjoy (or loathe, depending on your bent) today?  Yep, it was along the banks of the “banking river” that political parties were born.

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The world has changed since I wrote that piece on Joseph Goebbels just a couple of days ago.  In fact, I was just finishing that article when our son called and told us to turn on the news.  And of course, we heard what you all now know.  The most wanted man in the United States, Osama Bin Laden, was not only found, but was confronted by special forces and ultimately killed.  I’m sure that, like the events of September 11, 2001, many will remember what they were doing on the evening of May 1, 2011, when they heard that America’s #1 enemy had finally received justice for his crimes.

So far, this evening hasn’t provided any news that approaches that level, but it can’t be like that every day.  So let’s head back a couple of hundred years and spend a moment on a bit of news.  In May of 1789, America was young enough to still be in the hospital awaiting release.  President Washington had just taken the oath of office, the country’s flag had but eleven stars, and people were arguing about the Constitution.  In fact, the debate over the Constitution had been continuous and often contentious in the eighteen months since its approval in Philadelphia.

One of the biggest issues involved the rights of the people.  Many believed the Constitution didn’t say enough about them, and there was fear that, over time, the new government would begin taking power away from the people.  Others believed that the government only had the power to act on the powers it was expressly granted in the Constitution, and all other powers were, by extension, granted to either the States or the people directly.  But what was supremely clear was that the Constitution’s lack of a set of enumerated rights caused great concern for a great many people.  It had weighed heavily at the Constitutional Convention, to the point that a commitment to address it in the future was necessary to allow the document’s passage.  It had weighed heavily in several of the State conventions.  And it was one of the reasons North Carolina and Rhode Island still held out against statehood.

And now those in favor of a weak government were using the call for a “Bill of Rights” as a springboard to try to gut the federal government’s power.  Amendments were being proposed in Congress that would limit the power to tax, to make treaties, and regulate commerce.  In essence, what was being put forward was a return to an “Articles of Confederation”-style of government, which would have mortally wounded the Constitution.  James Madison, who initially opposed a Bill of Rights, came to see that it was necessary, not only as a way to keep his promise and end a lot of debate, but also to thwart an Antifederalist agenda to gut the document he (and others) had worked so hard to create and defend.

And so on May 4, 1789, he stood up in Congress and announced that, once more important getting-the-government-off-the-ground matters had been addressed, work would begin on a bill of rights.  Madison said, “If we can make the Constitution better in the opinion of those who are opposed to it, without weakening its frame, or abridging its usefulness in the judgment of those who are attached to it, we act the part of wise and liberal men to make such alterations as shall produce that effect.”  And James Madison didn’t have to look very far to find good suggestions for consideration, as the States (when debating ratification of the Constitution) had come up with hundreds of ideas.

Actual work on these enumerated “rights of the people” would not begin until August, and the process would be lengthy.  But in the end, the Bill of Rights we know today are vitally important (and often-debated).  As I wrote some time ago, they are ”Thou Shalt Nots” by which our government must abide.

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In today’s political landscape, taking a side on any particular issue is likely to get a person on the wrong side of about half the country.  But that’s not really news.  We live with a strongly-divided two-party system with each one holding positions that are, in most cases, diametrically opposed to each other.  Whether it be about the size of government, some social issue, or whatever, taking a position generally involves very little middle ground.

But sometimes, taking a stand in the middle offers little or no protection, either.  Let’s look at one such instance from the pages of history.

As the 18th century came to a close in America, few issues were more divisive than the French Revolution.  Whether it was the general population, or those Founders in charge of the fledgling government, opinions pretty much fell into two camps.  There were those that favored the uprisings that began in Paris, heralding them as “the son of the American Revolution”.  Others maintained that it was little more than a sadistic, reverse-engineered purge, one in which the people not only overthrew their leadership, but led them to the guillotine to relieve them of their “headship”.

Once Louis XVI had felt the blade’s bite on his neck in January of 1793, it took but a week for the French to declare war on England and Holland.  And that put President Washington in a difficult position.  Did he side with the French, who had clearly been an ally in America’s own struggle for independence?  Or would it be with England, an enemy not so long ago, but not so now?  The country was deeply split on the issue, but the President didn’t pander to either side.

In his biography of the man, Ron Chernow writes that “Washington hoped to win respectability from foreign powers, but he also wanted to stay free of foreign entanglements so the young nation could prosper.”  And on April 22, 1793, he did just that, landing directly in the middle of the issue with what came to be known as the Proclamation of Neutrality.  The final document didn’t actually contain the word neutrality, but asked the nation’s citizens to “pursue a conduct friendly and impartial toward the belligerent powers.”

And you can probably predict what happened.  A few people (mostly those less inclined to the French position) were pleased with the President’s stance.  But many others had a completely different reaction, one that was neither friendly nor impartial.  They believed Washington and his “minions” were turning their backs on the one alliance that had sustained them during the Revolution.  It mattered little that a strong case could be made for France supporting the Colonies out of self-interest (keeping the British pre-occupied) as opposed to some sort of Revolutionary altruism.  Also ignored in much of the negative feelings was the small fact that most of the French supporters of the Revolution now had their disconnected heads stuffed between their knees.

Members of Congress was also upset, believing they had been side-stepped by the President.  They contended that if Congress had the power to declare war, it also had the power to declare neutrality.  Some went so far as to say that Washington was acting the part of a monarch, issuing an edict from his Hamiltonian-inspired throne.

There appears to be truth to the old adage that landing in the middle of an issue only serves to make everybody mad.  It certainly worked for Washington on this day in history…

Recommended Reading: Washington – A Life

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Robert Livingston had worked hard to get an audience with Talleyrand.  He knew that James Monroe was on his way to pitch to the French the idea of purchasing New Orleans and maybe the Floridas.  And, quite likely, a bit of pride made him want to be the guy to get the deal brokered.  Well, now here he was, on April 11, 1803, in front of the man most able to make it happen.

But when Livingston pitched the sale to Talleyrand, he was rejected out of hand.  And that was that…until Livingston stood up to leave.  It was then that the French minister asked if the United States wish to own all of Louisiana.  Livingston was shocked, but repeated the Administration’s line.  “No.  Our wishes extend only to New Orleans and the Floridas.”  But Talleyrand persisted…make an offer, he said, any offer.  Livingston replied with 20 million francs, which Talleyrand rejected immediately.  Livingston left the office.

It doesn’t sound like much, but it was the start of a series of negotiations that ended with the acquisition of the most important piece of real estate the United States would buy.  One million square miles…at that time, the largest peaceful transfer of property in history.  French dictator Napolean Bonaparte had already decided in his mind that he would likely sell the territory.  It was tremendously expensive to guard and, frankly, he wanted the money to finance his European ambitions.  He would have preferred that one of his other (read: more trusted) ministers do the deal, but getting Louisiana off the books was the bottom line.

And it began here….with a simple meeting that really didn’t go as planned for either attendee.

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On April 10, 1803, James Monroe arrived in Paris, France.  His task, as given him by the Jefferson Administration, was to attempt to purchase New Orleans from the French.  But this statement probably needs a bit more context.

The Spanish-American treaty of 1795 had given America commercial access to the southern port.  Because the monster Mississippi River flowed out into the Gulf there, it was of immense importance to people living in what was then deemed “the West” (that area between the original Colonies and the Mississippi River).  In fact, when writing to Charles Pinckney (then the minister to Spain), Secretary of State James Madison penned, “The Mississippi is to them everything.  It is the Hudson, the Delaware, the Potomac and all the navigable rivers of the Atlantic States formed into one stream.”

But Monroe didn’t go to France because of the Spanish-American treaty.  He went, because in November of 1802, the Administration learned that the Spanish intendant in New Orleans had closed the port to American business.  And because the French had just purchased New Orleans from the Spanish, it was suspected that some shenanigans by Napolean was in the works.

The Spanish minister in Washington tried to quell the incident as a mistaken act by the over-zealous intendant, but protests against the Spanish and the French had already begun.  It quickly became clear that if American trade down the largest of America’s rivers was to be protected, it was simply in America’s best interest to own New Orleans.

And so James Monroe was sent to Paris.  Madison was quick to remind him that the Jefferson Administration was not interested in the land west of the Mississippi, just protecting its interests on the river itself, particularly at the port.  Furthermore, word had come to Washington that the French might have acquired the Floridas as well, so if they wanted to be rid of that territory, the States were more than interested in purchasing it as well.

So it’s not too hard to imagine everyone’s surprise when Robert Livingston (the American minister already in Paris) met with French minister Talleyrand the next day.  It was then…

…well, let’s look at that tomorrow.

Recommended Reading:  The Last Founding Father – I just received my copy this past week and anxiously await its turn on my bookstand.

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Well, it’s the last day of February, and that means another year of Today’s History Lesson is about to enter the history books.  I’ll have to do a count of the number of pieces that have come out since March 1st of last year.  Three years.  That’s how long we’ve been together.  Some of the articles have been short, some long.  Some alright, with a few stinkers thrown in for good measure.  Tomorrow begins year four of this little experiment.  I’m not sure how long it will continue, but I know we’ve got a little something for this evening.

On February 28, 1792, Thomas Jefferson met with George Washington.  The topic of discussion between the nation’s first President and its first Secretary of State was supposed to be about the post office, signed into existence just the week before.  But it turned out that the Secretary of State really wanted to talk about the nation’s first Secretary of the Treasury.

In our three years together, it should now be obvious to you that our first Secretary of State (Jefferson) did not like our first Treasury Secretary (Alexander Hamilton).  But in case it’s not yet obvious, let me try this…JEFFERSON COULD NOT STAND HAMILTON.

Hehehe…maybe that’ll do the trick.

Jefferson was absolutely, totally, completely, 100%, cross-my-heart-and-hope-to-die convinced that, from his position at Treasury, Alexander Hamilton was paving the way for a return to a British-style monarchy.  And nothing could change Thomas Jefferson’s mind on the matter.  Every little thing Hamilton did was twisted by Jefferson to smack of desiring a king.  Hamilton could have mentioned that he measured a monarch butterfly with a ruler, and Jefferson would have told someone (likely James Madison or Philip Freneau, who ran the anti-Hamilton National Gazette) that Alexander spoke positively of “monarch rule.”

Seriously…it had pretty much gotten to that point.

Now, no legit historian (at least that I can see) really thinks that Hamilton, nor Washington, nor even John Adams (who made more pro-king comments than anyone) wanted a king.  That’s complete hogwash.  We know that Hamilton wrote the bulk of the Federalist Papers, and he alone was the single biggest reason the Constitution was ratified in New York.  He liked elements of the British system of government and even suggested some of them when offering his plan at the Constitutional Convention (we’ve mentioned that before and will discuss it in greater detail in the future), but that’s as far as it went.  Once a Constitution was created and agreed upon, he was behind it completely.

But President Washington listened to Hamilton…a lot.  More than he listened to Jefferson.  There is no doubt that Alexander Hamilton was the second most powerful man in America’s first government.  He was more powerful than Jefferson, he was more powerful than Vice President Adams, and he was certainly more influential than either of them.  And that created jealously.  And let’s face it, Washington was the hero of the Revolution, and he was the unanimous choice as President.  The vast majority of the populace loved him.  He was unassailable.  So, if you can’t rail on the top guy, go after the next guy in line.  And that’s just what happened.

But a bit of balance.  Thomas Jefferson had some legitimate differences with Hamilton.  As a devout agrarian, he believed the Treasury Secretary was setting up a system that favored speculators, gamblers, and industrialists at the expense of farmers.  This talk of stocks and bonds, of banks and financing the public debt, and the “city of the future” didn’t really appeal to Jefferson.  He also had valid questions about the government’s role in these enterprises.  Did the Constitution allow for such activity?  Were people equipped to deal with this?  These were all important issues, worthy of discussion and debate.

But Jefferson didn’t really focus on these issues.  He (and others) simply decided that Hamilton wanted a monarchy and that was that.  Everything was filtered through that prism.  Jefferson warned the President that “the department of the Treasury possessed already such an influence as to swallow up the whole executive powers and that even future presidents…would not be able to make head against this department.”  Of course, the Secretary of State immediately reminded his Commander-in-Chief that he had no political ambitions of his own.

Hehehe…I’m no expert, but other than getting a hundred times more intrusive, a billion times bigger, and a trillion times more expensive, I don’t think government in these United States has really changed all that much in all these years.

And with that, we’ll close the books on our third year.  I’m so grateful to my good friend Michael for creating this venue and giving me the chance to contribute.  Though it’s just me now, his influence lives on in these pages…and always will.  And of course, I’m grateful to all of you.  Your occasional thoughts and your correction of my mistakes sharpen me, as iron sharpens iron.

Thank you.

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There are some who might think I’ve spent way too much time writing about Alexander Hamilton.  Pick a different Founder, you say.  My response is that I will…when I do more learning about them.  Or maybe you don’t much like our First Treasury Secretary, believing him to be the first man to really monkey with the Constitution.  I would point you to the Federalist and argue that, while Hamilton made moves and created financial structures that were controversial in his time, no one better understood the constructs of the Constitution and the limits it placed on the branches of government.

So there!!

Still not convinced?

Oh well, that’s what makes history so intriguing.  Looking back, studying people and events, attempting to put some context around them, and coming to conclusions.  And sometimes, the conclusions we come to are different.

But today is a good day for those of you who are not fans of Alexander Hamilton.  Because even though his influence is felt today here (and all over the world), you can take solace in the fact that he was no longer doing anything under the auspices of the United States Government.  January 31, 1795 was the end of his tenure.

In December of the previous year, a worn out (and somewhat dejected) Alexander Hamilton had told President Washington that he was leaving office.  The reasons were many.  Exhaustion played a role, both in his own life and that of his wife, Eliza.  Then there was the job itself.  Almost since the inception of the Department, Hamilton had battled naysayers.  Members of Congress had railed against him.  They dug through financial dealings line by line, looking for the smoking gun to throw him from office.

The country’s first Secretary of State, Thomas Jefferson, had waged a one-man war against Hamilton.  He had hounded the President about him, strategized with James Madison to discredit him, and partially funded a newspaper to sling mud at him.  And after more than three years of trying, he simply resigned his office in frustration.  We know that Alexander Hamilton was no saint, but in his dealings from the Secretary’s office, there was nothing but honesty, integrity, and sound judgement.

So while sainthood eluded him, his homecoming to New York in February probably felt heaven-sent.  He was declared the patron saint of prosperity.  He was given a lavish party that overflowed with praise as much as food and drink.  The former Secretary received nine cheers that evening (President Washington and Vice President Adams received three each).  There was much tongue-wagging and speculation about his future.  George Clinton, New York’s governor, had just announced he wasn’t running for reelection, and scuttlebutt said the job was Hamilton’s for the taking.  There were even whispers of higher aspirations…some said he would be the second President of the United States.

But Hamilton’s needs were more practical.  He needed money.  For those who accused Hamilton of skimming money from the Treasury, his heavy debt proved otherwise.  Hamilton (like most men who served their country back then) made a meager salary, just $3,500 a year, far less than what he and his large family needed.  He had set aside his law practice (which probably would have made him 10 times his Secretary’s salary) to serve, and paid a large financial price for it.  He had worked tirelessly to clean up the country’s debt, and it was time to do the same for his own.

Alexander Hamilton was ready for private life and private practice, and he would begin on February 1st.  But make no mistake, he would never be far from the public eye and its scrutiny.

Recommended Reading: Alexander Hamilton

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As anyone with a pulse probably knows, the United States government is pretty badly in debt.  I did a few searches to try to find the total, but that was difficult.  It appears that most “debt-clock” sites show the nation in the hole by more than $14,000,000,000,000…14 trillion dollars.

But then there’s this thing called “unfunded liabilities”.  What’s the difference between those and traditional debt?  As best I can tell, a “debt” is money you owe for something you’ve purchased.  You borrowed to buy a car, or a house, or a boat.  So you have the asset, but you still owe money for it…that’s debt.  But let’s say you’ve committed to buying a house, even though you don’t have the money to pay for it.  That’s an unfunded liability.  Once you buy the house and get a physical loan for it, the unfunded liability becomes actual debt.

Like I said, the U.S. government’s debt is more than $14 trillion (and it’s gone up a couple million dollars in the time it’s taken you to read this far).  But the unfunded liabilities (commitments to pay for things) total more than $100 trillion…$100,000,000,000,000.

And since everyone in the country earns (added together) in the neighborhood of just (just!) $60 trillion, well…uh, I’m pretty sure that we’re in deep financial doo-doo.

In 1790, there was debt as well.  The U.S. government had borrowed heavily from the French and Dutch to finance the Revolution, to the tune of roughly $12 million in principle and interest (or about a minute’s worth of modern-day debt).  But in addition, the government had borrowed more than $40 million from its own citizens, handing out I.O.U.s like chucking candy from a float on the 4th of July.

And now that an “official” government was getting under way, one of first things on the docket was establishing good credit.  That meant paying off the debt.  Treasury Secretary Alexander Hamilton felt strongly (as did most of his contemporaries) that debt was bad for people, and worse for governments.  He would write that debt “is perhaps the NATURAL DISEASE of all Governments.  And it is not easy to conceive anything more likely than this to lead to great and convulsive revolutions of Empire.”

And so he set to work, building a plan to erase the debt and pay back the lenders, which would improve the new nation’s standing, both with its citizens and with the world.  That plan, called the Report on Public Credit, was 51 pages in length (the first page is illegibly shown above), and was read aloud to Congress on January 14, 1790.  It contained (essentially) three parts.

First, there was immediate repayment of the foreign debt.  Hamilton argued that those countries had given us hard currency in a time of great distress.  National honor was at stake.  Second, the United States would repay the $40 million in domestic debt to those that held I.O.U.’s from the government.  They would be paid at full face value with accrued interest.  And finally, since all of the states had built up some debt financing their own portions of the Revolution, the government would assume those debts as well.  They totalled about $25 million.  The grand total of debt to be paid was something less than $80 million (or what our government has run up while you’ve been reading this).  All members Congress agreed with the first point…repaying foreign debt was paramount.

But the battle began in earnest over the second and third points.

Point Two, paying off the domestic debt was important, but who would get the money?  Many of those owed money by the government were soldiers, who had left the army at fight’s end with nothing but a promise of compensation.  And promises don’t pay the bills.  So many of them had sold their I.O.U.’s (for 15 cents on the dollar or less) to speculators, who hoped to make a profit should the government decide to make good.  Now that it was, those folks stood to make a killing, while those who originally owned the debt got nothing.  Detractors of Hamilton’s plan said it wasn’t fair.  Speculators had taken advantage of others and now stood to make a fortune.  Something should be given to both groups.

Hamilton (and those that sided with him) argued that, while many people had sold their debt in time of crisis, they too had engaged in speculation…speculation that the government was not going to make good.  How was that really any different?  And to go back and try to find all these people was a logistical impossibility.  But what’s more, it amounted to the government giving people money that were no longer owed, which many considered discrimination.

As for Point Three (the assumption of state debt), this one really got some states steamed.  Yes, every state had debt after the Revolution.  Massachusetts and South Carolina, in particular, had very large debts.  But some (including powerful Virginia) had already paid off its debts through taxing its citizens.  Others still had some debt, but had sound plans already in place for repayment.  Now the federal government was going to assume all the debts and states like Virginia would be re-taxed.  Once again, Hamilton argued that having one overarching “debt-paying” plan in place was far better (and far more efficient and ultimately less expensive) than individual state programs.

But there was more to it.  Politically, the government was still in its infancy, and many still railed against it.  There were questions as to its long-term survival.  Placing the debt in the federal government’s hands meant that people’s allegiances shifted to the central government.  If people wanted to get their money back, it was in their best interests to see that government survived at least long enough to do so.  And since the plan included paying off 5% of the debt and interest each year, Hamilton’s motive was clearly not to make the central government an all-powerful entity to control the lives of its citizens.  He was basically using a bit of debt to buy a little time for a brand-new system to get grounded.

The Report on Public Credit would create months of debate in Congress.  James Madison, not present at the plan’s unveiling (he was late returning due to a bout of dysentery), would strongly disagree with Hamilton’s proposals.  In our musings together, we’ve often alluded to the friendship-turned-rivalry of these two great men.  That split began right here.

Recommended Reading: James Madison and Alexander Hamilton. Read the perspectives of each.

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“A little after noon on January 8, 1790, George Washington climbed into his cream-colored coach and rode off to Federal Hall behind a team of four snow-white horses.  In its sparsely worded style, the Constitution mandatd that the president, from time to time, should give Congress information about the state of the Union, but it was Washington who turned this amorphous injunction into a formal speech before both houses of Congress, establishing another precedent.”  Ron Chernow, “master” of Alexander Hamilton, penned those words in his biography of our first President, which was just recently released and is ready for your absorption.

In today’s world, with 220+ years of tradition to back us up, the State of the Union speech is something to which I look forward every year…to not watching.  I suppose it’s because I’ve become jaded to a process that has become so complicated and so expensive (to say nothing of being so mired in unrecoverable debt) that I no longer care to sit for 90 minutes and listen to the Commander-in-Chief talk about spending additional billions (or more) to assist us in our “pursuit of happiness”.  My dad has said many, many times that “everything translates to bucks”, and every word from a President’s lips (nowadays, at least) sounds to me suspiciously like a cash register ringing.

But in 1790, it wasn’t quite that way.  Oh, there was money that needed to be spent, but it wasn’t due to massive bloat in government.  It wasn’t caused by a debt so deep that simply paying on the interest was nearly impossible.


It was more about getting an actual government started.  Everything was new.  Chernow writes that everything (including the protocol for this first State of the Union Address) “still had an improvised feel.”  There was no precedent to follow, because new precedent was being set as the sun rose on each new day.  And President Washington talked hopefully about each step forward, desirous that would make the country stronger and more prosperous.

There was joy for North Carolina’s entrance into the Union.  She had rejected statehood in 1788, but voted to join in November of the following year.  He talked of the need to establish credit and spur economic growth, hinting at Hamilton’s upcoming report (which I hope to discuss next week) and accompanying financial program.  Washington spoke of national defense which, along with the Revenue Cutter service (to be started later that year), had some folks already worrying about government expansion and intervention.  Improved learning and a proposal for a national university also had a place in an “Address” that was both brief and to the point.

And then it was done.  The legislators stood up, Washington bowed, and stepped down.

Recommended Reading:  Washington – A Life – Thanks to Martin over at What Would the Founders Think for a review that pushed me over the edge to purchase this book.  If I can ever get Madison’s biography finished…

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I was doing some digging on the Internet the last week and came across an article that referenced the following verses from the Bible…“But there is nothing covered up that will not be revealed, and hidden that will not be known.  Accordingly, whatever you have said in the dark will be heard in the light, and what you have whispered in the inner rooms will be proclaimed upon the housetops.”  Taken from the New Testament’s book of Luke, they are perfectly suited to Today’s History Lesson.

Alexander Hamilton’s affair with Maria Reynolds left a blot on what was the exceptional (if controversial) life of one of America’s most important and influential Founders.  In his biography of the man, Ron Chernow summarizes this black episode by writing, “The Reynolds affair was a sad and inexcusable lapse on Hamilton’s part, made only the more reprehensible by his high office, his self-proclaimed morality, his frequently missed chances to end the liaison, and the love and loyalty of his pregnant wife.”

And he very nearly got away with it.

He probably would have had not James Reynolds ended up in jail.  The husband of Maria Reynolds was, in modern parlance, “a complete jerk.”  He let his wife continue in an illicit relationship with a member of President Washington’s Cabinet, then worked to extort money from him, all the while putting on the facade of the wronged man.

But Reynolds was also a scammer, and that’s how Hamilton’s secret became known.  Reynolds (and another man) tried to defraud the government by passing themselves off as the executors of a dead war veteran in order to collect $400 in benefits.  The plan’s failure landed Reynolds in jail.  And because the name of the war veteran came from a list stolen from Hamilton’s Treasury Department, the charges filed against the defendants were made by Treasury.  Immediately Reynolds suspected Hamilton of engaging in a bit of “payback”, and began dropping hints that he had information damaging to the Secretary.

At first it was believed that the Treasury Secretary was engaged in some sort of illegal activity…maybe illegal speculation or diverting funds or collusion.  Congressman Frederick Muhlenberg was the first to suspect the worst (having talked extensively with Jacob Clingman, Reynolds’ partner-in-crime), and visited with fellow Congressman Abraham Venable and Senator James Monroe.  The three men decided to write a letter and give it to the President, but to visit Hamilton before making the delivery.

On the morning of December 15, 1792, the three entered Hamilton’s office and confronted the Secretary about improper dealings with James Reynolds (who by now had been released from jail and had skipped town).  He responded angrily about the manner of their approach but denied nothing, instead inviting them to his home that evening, where he said he would explain everything.

That night, the three Congressmen, expecting to hear a tale of misdeeds and impropriety that had taken place behind the office door, were instead given a detailed account of a tawdry affair that had taken place behind a bedroom door.  Alexander Hamilton, as was typical, was incredibly detailed.  Chernow continues, “…as if in need of some cathartic cleansing, Hamilton briefed them in agonizing detail about how the husband had acted as a bawd for the wife; how the blackmail payments had been made; the loathing the couple had aroused in him; and his final wish to be rid of them.”  Alexander Hamilton came completely clean…letters, payments, details, dates, times…everything.

The letter to the President was set aside.  James Monroe would later write, “We left under an impression our suspicions were removed.  He acknowledged our conduct toward him had been fair and liberal – he could not complain of it.”

The three men all swore they would keep Hamilton’s confession completely private.  But as our Scriptures above will attest, Hamilton’s deeds were now public, even if the circle of “those in the know” was small.  It wouldn’t take long for news of those deeds to spread.

Recommended Reading: Alexander Hamilton

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Nowadays, the government has all sorts of ways to generate revenue.  When you get your paycheck, part of it goes to the government.  When you buy something, there’s almost always a tax on it.  Still have a land line at your house?  Guess what?…you probably pay a tax to Washington each month.  Win the lottery?…you paid taxes.  Do you drive?  Every gallon of gas is heavily taxed.  Taxes when you live, taxes when you die, and taxes for just about everything in between.  It’s the American way.

In 1790, the government had about one way to generate revenue, and that was via import tariffs.  People tried all sorts of ways to avoid paying them, but the Revenue-Marine, created in August of that year by the Treasury Department, made avoiding the tax man pretty difficult.  And that was good for Washington…well, actually it was still Philadelphia (though Washington was the President).

As 1790 came to a close, a couple of things were pretty apparent.  First, the revenues coming in were substantial.  Treasury Secretary Alexander Hamilton’s goal of reducing the debt and improving America’s credit was being achieved.  The economy was growing and the value of government securities had tripled.  The United States was operating at a surplus.

Second, it was Great Britain that was paying most of the bills.  The old mother country was far and away the biggest importer, which meant she paid most of the tariffs.

Third, at Hamilton’s urging, the federal government had taken on all the leftover war debts of the individual states.  This issue had caused the first major disagreement in Congress (and will eventually get some ink time around here), but had been resolved with one of the country’s first compromises.  It also left the Treasury Secretary in something of a bind.  Import duties were about as high as Hamilton dared raise them and he believed it was necessary to spread the pain around a bit.  But direct taxation of the people was fraught with peril, and a land tax (while good for the coffers) would have been universally loathed.

So Hamilton looked at “sin” taxes, particularly whiskey and domestic spirits.  It wasn’t a new idea.  As Hamilton had taken his post the year before, he had written to his friend James Madison.  “May I ask of you friendship to put to paper and send me your thoughts on such objects as may have occurred to you for an addition to our revenue…”.  Among Madison’s ideas was a tax on home distilleries, believing that “as direct taxes would be still more generally obnoxious and as imports are already loaded as far as they will bear…”.  He also believed that such an excise tax had a social benefit, reducing drunkeness and disease.

On December 13, 1790, Alexander Hamilton presented his plan to Congress.  And as expected, howls of protest were heard.  Home breweries were a sacred part of local culture, and government intervention of any kind (to say nothing of direct taxation) was badly resented.  It was clear that many distillers would only give the government its share at the end of a musket…which is exactly what happened.  And we’ll cover that at some point as well.

Recommended Reading: Alexander Hamilton

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“The mistakes of the father are often visited upon the son.”

“The apple doesn’t far very far from the tree.”

“Like father, like son.”

These are phrases that you and I have probably said hundreds of times.  We watch children grow up and, whether they belong to us or not, we often notice that the path they follow in some ways resembles that of their parents.  And sometimes that’s good.  Some parents work really hard to set an excellent example for their children, and the kids pick up that example and run with it.  Of course, sometimes the opposite is true, and we watch a cycle of anguish and heartache begin to form.  And then we’ll shake our heads, turn back toward our front door, and mutter one of those phrases under our breath.

But sometimes the time-space continuum gets all contorted.  What was “up” becomes “down” and things start to get all wobbly.  When that happens, it’s the behavior of the children that ends up manifesting itself in the parents.  Yikes!!

Parents are supposed to be experienced…mature…capable of clear, sound thinking and good judgement.  Usually…

Well, time and space conspired to create just such a flip-flop in the Hamilton family.  Alexander Hamilton’s family.  Philip Hamilton was oldest of the children and he had every indication of following in his father’s footsteps.  He was intelligent, good looking, and a bit of a rake (in a youthful way).  He was a fine orator and writer.  The future was promising for young Philip, so much so that his father called him the “eldest and brightest hope” for the family.

But like his father, Philip had a strong sense of honor and, even in his youth, would protect that honor at all costs.  July 4, 1801 was a day of celebration.  The country was a quarter century old, and there was celebration and pomp throughout the country.  There was merriment and feasting.  And, of course, there was speech-making.  In New York, the people gathered for the reading of the Declaration of Independence.  When it was finished, George Eacker got up and addressed the crowd.  This young lawyer was a strong supporter of the Republican movement and President Jefferson.  And as we know, Jefferson was no friend of Alexander Hamilton.

Eacker praised Jefferson for saving the Constitution and the Republic from the likes of Hamilton, blaming Hamilton for the XYZ Affair and, once again, accusing Hamilton of favoring a return to monarchy.  Of course, the speech was published in the newspaper.  And Philip Hamilton read the papers.

Fast-forward to November when, by chance, young Hamilton ran into George Eacker at the Park Theater.  The encounter was heated, with strong words and loud voices that created a disturbance for others trying to watch a play.  Eacker muttered that Philip (and the man with him) were “rascals”.  Today, the word “rascal” means very little.  Maybe we think of Alfalfa or Buckwheat in black and white, but that’s about it.  In 1800, however, the word was loaded.  Calling someone a rascal was the codeword to a duel…and that’s exactly what happened.

Two days later, on November 22, Philip Hamilton and George Eacker exchanged gunfire.  Hamilton had already determined to let Eacker pull first before wasting his own shot in the air.  Unfortunately, Eacker did not throw his shot, which ripped through the former Treasury Secretary’s oldest son and dropped him to the ground.  Taken immediately to the doctor, Philip was soon joined by his father and mother, who was pregnant with their eighth child.

At 5:00am on November 23, 1801, Philip Hamilton died from his injuries, leaving grief-stricken parents, brothers, and sisters.  Eliza’s baby, born in June of the following year, would be named Philip in honor of the lost son.

And in a striking coincidence, the father did not learn from the mistake of the son.  As we well know, Alexander Hamilton would meet his end in exactly the same fashion:  a duel in which he had decided to spare his opponent…one Aaron Burr.

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Over the last couple of months, we’ve spent some time discussing the Constitutional Convention.  We’ll continue to do so, but let’s jump ahead a couple of years.  The U.S. Constitution had been ratified and, one-by-one, the remaining state legislatures were voting to join the Union.  In fact, of the original 13 Colonies, only New York, North Carolina, and Rhode Island remained independent of the newly-formed government.

And despite the fact that many people were greatly concerned about this new government (a representative republic was a pretty novel idea), a great many more countered that with their immense optimism.  In fact, there was hope that this concept of “rule by the people” would spread beyond the borders, to places like…France.

It kind of made sense.  Numerous French aristocrats had spent time in America in the years spanning the Revolution and had seen the push for liberty.  And let’s face it, French assistance (particularly as the navy was concerned) had been critical, probably indispensable, to the American cause.  Furthermore, French financial aid had allowed America (which really had no money to speak of) to continue in a war it couldn’t afford.

So it stood to reason (at least to many prominent Americans) that love of freedom would begin to affect change in a country where the monarchy had, for so long, ruled the day.  Late in 1788, Thomas Jefferson, a great lover of France, believed it strongly, and told all his colleagues so.  To George Washington he wrote “The nation has been awakened by our revolution, they feel their strength, they are enlightened, their lights are spreading, and they will not retrograde.”  He wrote to James Monroe that, within a couple of years, France would have a tolerably free constitution and have shed no blood to attain it.  To James Madison he would write (in March of 1789), “France will be quiet this year, because this year at least is necessary for settling her future constitution.”

And there were signs of change.  The French legislature was renamed the National Assembly on July 9th, providing evidence of a potential shift of some power to the people.  Louis XVI seemed to (grudgingly) accept the idea of a constitutional monarchy which, while still not a republic like the U.S., was a step.

But underneath it all, there were far more sobering rumblings.  The French, unlike their American counterparts in the 1760’s and 1770’s, were not trying to throw off the shackles of a foreign government control.  They were beginning to revolt against the control of their own government…against hundreds of years of monarchy.  The animosity…no, that’s too soft a word,  “years of pent-up rage” is likely more accurate – was reaching the boiling point.  The problem here was victory didn’t involved expelling a foreign power back to its homeland.  Those currently in power were part of France and, much like American Tories and Loyalists who sided with the British in the Revolution, would face recrimination should they lose.  And (as we know from the historical record) it would be bloody.

I’m certainly no expert, but this might be an undercurrent that Jefferson, in his hope for France, overlooked.  And on July 11, 1789, the future U.S. President might have been thinking of other things anyways.  It was on this day that Marie-Joseph Paul Yves Roch Gilbert du Motier, famous in America and Revolutionary history as the Marquis de Lafayette, got up and presented to the recently-renamed National Assembly the “Declaration of the Rights of Man and of the Citizen.”  It was a great moment for Lafayette, who vowed with other members of the assembly to remain together until a Constitution was formed.  It was a great moment for Jefferson as well, who had reviewed the document for the Marquis.

But events later in the day and in subsequent days would conspire to shatter any prospects for a peaceful French Revolution.  The streets throughout France, and particularly those in Paris, would run red with French blood.

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Poor William Duer.  I don’t mean “poor” in the sympathetic way, where we feel sorry for him.  I mean “poor” as in flat broke.  He didn’t start out that way, but that’s how he ended up.  He was a member of the Continental Congress and signer of the Articles of Confederation.  He served as Alexander Hamilton’s Assistant Secretary at Treasury.  And a year later, he was languishing in debtor’s prison, lucky to have remained alive long enough to get there.  And in prison he would remain until death released him in 1799, seven years later.

So what happened?

The simple answer is that Duer was a gambler…he liked to speculate.  His compulsive behavior was unbounded.  We have already seen, through a glass darkly, the role he played in the first “stock market crash” back in 1791.  Fortunately, that crash had been contained by quick action.  But even before that, the economic system built by Hamilton was gaining momentum.  Exports were rising, companies were starting up, money was changing hands, and European countries were buying up American bonds.  And now with a disaster averted, confidence soared.

And William Duer could not be contained.  He was warned by numerous people that his rampant speculation would land him in trouble.  His wife Lady Kitty chided him, saying, “…your mind will be too much harassed with the variety of business and speculations you undertake to allow you…inward quiet.”

But her husband was on a roll.  Already the biggest fish in the New York financial pool, he hooked up with a land speculator (Alexander Macomb) on a scheme to corner the market in government bonds and bank shares.  He borrowed massive amounts of money to finance his deals, drawing other players into his “Six Per Cent Club”, named for the 6% government securities he was attempting to control.

New banks were started to help finance these schemes, with their bank shares selling at unsustainable values.  Where 1791 had seen “Scrippomania”, January of 1792 had “Bancomania”.  Hamilton and other rational thinkers were aghast at what was happening, and vehemently warned these men that they were treading on extremely dangerous ground.

For a bit, it was euphoria for investors.  People made tons of money on outrageously inflated bank and government securities.  And then guess what?  Just like 1791, the sudden realization that prices might be over-extended took hold, and the slide began.  Duer borrowed more money to cover himself, getting it from local townspeople and shopkeepers.

By March 9th, Duer’s credit was exhausted…his covering for himself was done.  But the damage wasn’t limited to him alone.  His fingers were all over the financial system, and he wiped out gobs of people.  As in the previous year, the Treasury stepped in again, purchasing securities off the market to steady the system, but for many, Duer had ruined them just as he had ruined himself.

The mobs of financially devastated people descended on the jail where he was (and Macomb was soon to join him), hurling stones and looking to lynch the man who had taken everything from them.  The Panic of 1792 (as it came to be known) had deep repercussions.  Anti-Federalists like Jefferson blamed Hamilton for creating a financial monstrosity.  Hamilton was left to defend a basically sound system that was ruined by carelessness, subtle manipulation, wild speculation, and unchecked greed.

I recount this episode, not just for the sake of the story, but for what came from it.  Once again, I’m forced to submit to the incredible writing of Ron Chernow.  “William Duer’s downfall exposed the magnitude of the securities market that Hamilton had opened up.  It also showed how easily the market for government bonds could be rigged by swindlers planting false rumors and expoiting the auction system for stock trades.”

From this came the Buttonwood Agreement.  A group of two dozen brokers gathered on May 17, 1792 at 68 Wall Street (under a buttonwood tree) and set the boundaries for securities trading.  And friends, this agreement is the foundation of the modern New York Stock Exchange.  Chernow continues, “It attested to the extraordinary, if sometimes combustible, vigor of the capital markets that Hamilton had singlehandedly brought into being. … Henceforth, Wall Street would signal much more that a short, narrow lane in lower Manhattan.  It would symbolize an industry, a sector of the economy, a state of mind, and it became synonymous with American finance itself.”

The safeguards put in place nearly 220 years ago can still be misused to do damage, small and great.  It might be an Ivan Boesky dabbling too heavily in junk bonds.  It could be a CEO like Ken Lay, fudging balance sheets to maintain stock prices.  Or maybe its Bernie Madoff, bilking people of billions.  These people we will always have with us.

But those safeguards have kept the U.S. financial markets one of the very best places to “play the lottery” with your money, despite the presence of a William Duer or two.

Recommended Reading: Alexander Hamilton

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It is no real secret that John Adams had a difficult Presidency.  The reasons are many.  He followed in the shadow of the revered George Washington.  He was fully exposed to the unbridled fury of the press which, as we have seen before, showed little restraint and an even more fleeting adherence to the truth.  His enemies were numerous and powerful, reading like a “who’s-who” of the Founders.  Jefferson (his own VP).  Madison.  Hamilton.  Even Washington, the great diplomat, didn’t get on well with John Adams.  Just before the end of the 18th century, there was a war brewing between the U.S. and France, and Adams’ enemies were certain that he was leading them towards it.  Of course, they knew that Adams had sent a peace delegation to France to negotiate a treaty (a treaty that would eventually be signed), but again, that mattered little.

And while Adams had his own issues (a raucous temper and a pronounced arrogance), there is small doubt that external forces really had it in for the 2nd President.  Today we focus on another of his problems…his Cabinet.  When Adams was elected, there was no precedent for how to handle Cabinet members, so Adams simply carried them over, and it turned out to be his biggest mistake.

We talked about it before, but when Washington was President, his real #2 man was not Adams (the VP), but Treasury Secretary Alexander Hamilton.  And Hamilton got on well with all of Washington’s circle…except Adams.  When Adams took over as President (Hamilton had resigned by then), there was no room for Hamilton in his world.  So Hamilton worked through Adams’ Cabinet, influencing their decisions and generally getting in Adams’ way.  All three of the primary Secretaries (Pickering, James McHenry, and Wolcott) were under the sway of Hamilton.  Adams would prospose policy, Hamilton would be informed, who would then offer his opinions, which would influence the Cabinet.

If Donald Rumsfeld (former Defense Secretary in President Bush’s Cabinet) was quietly directing members of President Obama’s Cabinet, you can imagine that the President would take pretty strong exception to it.  Well, Adams did, too.  But he didn’t really do anything about it.

Until May 5, 1800.

With his 1st term winding down and Jefferson looking more and more like the 3rd President, Adams had finally had enough.  That evening, as an insignificant meeting between Adams and War Secretary James McHenry (shown above) was ending, something McHenry said or some attitude he showed (no one knows for sure) set the President off.  He accused McHenry of working with Hamilton (which was true) to undercut his administration (which was less true, but had merit).  And while Adams actually liked War Secretary personally, he thought he was incompetent (which also had merit) and finished with, “You cannot, sir, remain longer in office.”

When McHenry offered to resign, Adams became quite apologetic, and he later badly regretted his outburst.  But, as David McCullough writes in his biography of our 2nd President, “…nothing he had said was untrue, nor was his anger without justification.  In firing McHenry he had done what he should have done well before this.”

As it turns out, he fired Secretary of State Pickering a few days later, and Wolcott was out at Treasury just before Adams’ term ended.

We see turnover in Cabinets pretty regularly now, so we’re kind of used to it.  But as far as I can tell, this incident was the first in U.S. history where a President fired a Cabinet Secretary.

Recommended Reading: John Adams

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