Posts Tagged ‘Secretary of the Treasury’

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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Alexander Hamilton was obsessed with his reputation.  As Treasury Secretary, he did everything possible to maintain the integrity of the office.  He was detailed, almost to a fault, with the records.  Every “i” was dotted and every “t” was crossed.  Nothing untoward interested Hamilton in the slightest.  The mere thought of impropriety was anathema to him.

His entire professional career was, almost without exception, lived above reproach.  When there was suspicion of wrong-doing, it was always unfounded.

So it comes as something of a surprise that Hamilton displayed such incredibly bad judgement when it came to Maria Reynolds.  The wife of James Reynolds (an acquaintance of the Secretary), Maria was 11 years younger than Hamilton.  She came to him as the distressed spouse of an abusive husband and mother of a young daughter.  Her desperation likely resonated with Hamilton who, as the son of a “fallen woman”, felt a greater sympathy to her plight as he remembered his mother’s struggles.

She asked for some money, and he offered to bring some by her home in the evening.  He would recount the events later when he penned, “…I put a bank bill in my pocket and went to the house.  I inquired for Mrs. Reynolds and was shown upstairs, at the head of which she met me and conducted me into a bedroom.  I took the bill out of my pocket and gave it to her.  Some conversation ensued from which it was quickly apparent that other than pecuniary consolation would be acceptable.”

It doesn’t take much imagination to figure out what, in 18th-century language, was being described here.

And so began an affair that lasted the better part of 3 years.  It only took a few months for Hamilton to realize he was making mess of things and try to extricate himself.  But James Reynolds was having none of it.  He truly was abusive and he was a rake, but he was also calculating and knew the Treasury Secretary was in a bad position.  Rather than fly into a rage or demand a duel, James began extorting Hamilton, threatening to expose the affair to Eliza (his wife) while essentially forcing him to maintain an illicit relationship.  Mr. Reynolds had become a pimp, and his wife the prostitute for hire.

Alexander Hamilton clearly knew he was in danger, but his weakness for women, his appetites, the obvious lure of Mrs. Reynolds, and her husband’s threats served to keep him hooked.

James wrote ridiculous letters, saying things like, “…you have acted the part of the Cruelist man in existence.  you have made a whole family miserable.  She ses there is no other man that she Care for in this world.  now Sir you have bin the Cause of Cooling her affections for me.”  Blackmail was Reynolds’ strong suit, grammar not so much.

In mid-December, Hamilton and James Reynolds met face-to-face, and the Treasury Secretary was informed that one thousand dollars would go a long ways to healing a husband’s “wounded honor”…not to mention keeping Eliza Hamilton out of the loop.

The following week, on December 22, 1791, made the first blackmail payment to James Reynolds.  He would make another a couple of weeks later.

Alexander Hamilton was a tremendous thinker and visionary, but his terrible decisions regarding Maria Reynolds would serve to sully his good name.

Recommended Reading: Alexander Hamilton

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Alexander Hamilton’s tenure as the country’s first Treasury Secretary was a stormy one.  In those 5 years, he had overseen the creation of America’s financial system and a national bank.  He had witnessed the first stock offering and, a few months later, the first stock market crash.  He had created a system by which the fledgling U.S. Government could pay down its debts and establish good credit with foreign powers.  Ultimately, he set in motion (in the 1790’s) many of the financial principles we still utilize today.

Alexander Hamilton had also made quite a few enemies.

His views (and his actions) produced, in the minds of his opponents, a stronger central government than was necessary or desired, and it brought him into sharp debate with them.  These “anti-federalists” (those against a strong federal government) argued long and loud against the “federalists”, claiming their final plan was a return to the hated monarchy.  And while Alexander Hamilton was not the leader of the Federalist party – that honor went to President Washington and Vice President Adams – Hamilton became the poster-child for all that was wrong with their philosophy.  He was the Anti-Federalist whipping boy.

His opponents scoured the “Hamiltonian landscape” for anything untoward…any kind of official misconduct that could form the noose of his political lynching.  For several years they peered into the records.  But Alexander Hamilton, as many of you know, was painstakingly precise with the books.  Any appearance of official misconduct was abhorrent to the young Secretary.  Anti-Federalists pored in vain over the ledgers and found nothing…until 1794.

In the spring of that year, they discovered what they thought to be the smoking gun.  Back in 1790, Congress had set aside monies to be used to pay overseas creditors.  Hamilton had diverted some of the funds to domestic spending, after consulting with the President…but Hamilton had no evidence to prove the meeting took place.  President Washington was consulted and, 5 years after the fact, had no evidence of the meeting, either…and no recollection that it had taken place.  The President was quick to add that, if the meeting had taken place, he was sure he would have advised Hamilton to do what was consistent with the Congressional directives of the legislation.

To some degree, the President had thrown his Secretary to the wolves.

The formal inquiry turned up Hamilton’s misconduct (which we’ll visit in a couple weeks), but none of it was official.  Hamilton ended up being exonerated of any misappropriation.  The damage, however, had been done.  The Secretary felt betrayed.  The character of his office had been called into question, and that was anathema to Hamilton.  And while he and the President would remain on good terms (Washington asked Hamilton to compose his Farewell Address just two years later), any blot on his integrity (real or implied) was too much.

But there was more.  Hamilton had just return from an exhausting trip west with the President as head of the army.  Their mission to squelch the Whiskey Rebellion had been successful, but had served to make Hamilton more hated among the “drinkers of hard liquor”, so much so that he required a six-man escort.  And Eliza, his devoted wife, had just suffered a miscarriage, which Alexander largely blamed on the stresses of his constant absence.

On December 1, 1794, America’s first Treasury Secretary announced his departure, effective January 31, 1795.  In accepting his Secretary’s resignation, Washington spared little of his most effusive praise.  Thinking back over their strong 20-year working relationship, the President cast aside the rantings of Jefferson and the ravings of Madison and wrote, “In every relation which you have borne to me, I have found that my confidence in your talents, exertions, and integrity has been well placed.  I the more freely render this testimony of my approbation, because I speak from opportunities of information which cannot deceive me and which furnish satisfactory proof of your title to public regard.  My most earnest wishes for your happiness will attend you in retirement.”

Recommended Reading: Alexander Hamilton

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