Everyone noticed early on that the ladies were fatally attracted to him. In fact, Abigail Adams, after she met Hamilton, said, “The devil is in his eyes. His eyes are lasciviousness itself”—what we would call “bedroom eyes.” Hamilton clearly had a roving eye.
DR: So the war was over. We signed the Treaty of Paris. The Articles of Confederation were governing the country, and Hamilton was a member of the Congress. What could be better than that? He was making a lot of money as a lawyer. He’d married into a prosperous family. Why did he decide to try to overturn the Articles of Confederation?
RC: For one thing, throughout the war, Hamilton and Washington were constantly writing letters to the Congress and the state governors, pleading for men and money. The Continental Congress did not have the power to demand money from any of the thirteen states. They did not have the power to demand men from the states. They could only request. And of course all of those thirteen state governors decided that they would rather keep the money and men in their own states. So Hamilton already saw the weakness of the Articles of Confederation.
When he was in the Confederation Congress, it had no independent revenue source. They tried to enact a 5 percent impost—a 5 percent customs duty. They could not get that passed. Hamilton, I think, despaired of the Articles of Confederation as ever being the framework for a real government.
DR: So he and Madison caballed to put together an effective request for a constitutional convention.
RC: They met in Annapolis, Maryland, in late 1786. There was a small conference called to try to iron out trade disputes. There was no common trade policy, so Connecticut had its own import duties, as did New York, as did New Jersey, etc.
What happened at this little conference in Annapolis was that they realized the disputes over trade policies were just symptomatic of the basic problems with the Articles of Confederation. Hamilton personally wrote and issued the plea for a constitutional convention to meet in Philadelphia in May of 1787.
DR: Congress agreed to have a constitutional convention that might modify but not completely change the Articles of Confederation. The trick was getting George Washington to show up. Why was that so important?
RC: They realized that Washington would give the convention a cachet it couldn’t possibly have otherwise. Hamilton and Madison at that point were comrades in arms, but that changed. This was the one relationship where someone went from being Hamilton’s political friend to political enemy.
But at that point they were working very, very closely together, and they realized that technically the Constitutional Convention was supposed to revise the Articles of Confederation. Hamilton and Madison saw that was ridiculous—that they needed to scrap the Articles of Confederation and create a brand-new constitution. That was obviously going to be something that would be hard for the general public to swallow, so they felt that it required someone of George Washington’s stature to reassure the country that this was not some sinister plot being hatched in Philadelphia.
DR: Hamilton convinced Washington to go, and he showed up at the Constitutional Convention. They met for three months. What was Hamilton’s role in the convention? He wasn’t really that powerful, was he?
RC: In the opening weeks of the convention, Hamilton didn’t make a single speech. When he finally opened his mouth, being Alexander Hamilton, he spoke for six straight hours. He presented his own plan for a new form of government, and it was frankly pretty wacky. It was not his greatest moment.
For the presidency, he wanted to have an elective monarch, essentially. He wanted the president to be elected but then to serve for life, subject to impeachment or recall. It was a terrible idea, but luckily it was not taken seriously. Then Hamilton got down to the serious business of passing a more realistic proposal.
DR: At the Constitutional Convention, each state had one vote, and there were two people in the New York delegation who were against his views. Hamilton was always outvoted, so he didn’t show up that much, did he?
RC: Right. The New York State governor was a man named George Clinton, who was a real local boss. George Clinton loved the Articles of Confederation. The weaker the central government, the more he liked it, so he was afraid of the Constitutional Convention.
There were three delegates from New York: John Lansing Jr., Robert Yates, and Hamilton. Lansing and Yates were sent by Governor Clinton essentially to sabotage the Constitutional Convention. It wasn’t until a certain point, in the middle of that summer, when Lansing and Yates left the Constitutional Convention for good, that Hamilton suddenly came back, realizing his moment had come.
DR: When the convention agreed on the Constitution, Hamilton agreed to it even though he thought it wasn’t perfect. Why?
RC: People often say, “Well, the final document was so different from his speech,” but the final version of the Constitution differed in significant ways from the views of every single person there. Hamilton’s elective monarch was wacky, but Madison wanted the federal government to have a veto over every state law—not exactly a great idea either. Benjamin Franklin wanted a plural executive—that is, instead of one president, we would have a council of three, which I think we will all agree was not a great idea. The beauty of this situation was that all of these men were able to then rally around this compromise document.
DR: As drafted, the Constitution said that it would go into effect if nine of the thirteen states ratified it. What was Hamilton’s role in the ratification process?
RC: Major. First of all, it was Hamilton who originated the idea for The Federalist Papers, basically because New York was one of the states with significant opposition to the Constitution.
The Federalist Papers were eighty-five essays published over a six-month period. [Written by Hamilton, Madison, and John Jay and published under the pseudonym Publius, the essays argued the case for ratifying the Constitution.] Alexander Hamilton wrote fifty-one of them, and he was doing this as a sideline. He had a full-time legal practice. We have anecdotal evidence of the printer sitting in the outer office as Hamilton was finishing the final lines, and then the printer would run off to publish them.
DR: The Federalist Papers were written, the Constitution was ratified and went into effect, and George Washington was then elected president of the United States. There was no provision in the Constitution for a cabinet, but Washington decided to have one. Why did he decide to have Hamilton be his secretary of the treasury, and was that the job Hamilton originally wanted?
Alexander Hamilton, James Madison, and John Jay made the case for the Constitution in a series of eighty-five public essays, The FedAveralist Papers. Hamilton wrote fifty-one of them.
RC: I’m sure that was the job that Hamilton wanted. The story is told—how accurately I’m not sure—that as Washington was en route to New York in 1789 for his first inaugural, he stopped off in Philadelphia and asked Robert Morris to be the first treasury secretary. Morris had been the financier of the Revolution. He used his own personal credit to finance the American Revolution.
Morris declined the job. He was already running into serious financial problems that would land him in debtors’ prison in a few years, and he suggested Hamilton. Washington supposedly said to Morris, “I didn’t realize that Alexander Hamilton knew so much about finance,” and Robert Morris said, “To a mind like his, nothing is amiss.”
I think Washington knew all about Hamilton’s knowledge of finance. So Hamilton, at age thirty-four, became the first treasury secretary, which was far and away the most important job in the cabinet.
DR: The cabinet then had three people.
RC: Effectively, yes. Even the attorney general was a part-time legal advisor. There were three cabinet secretaries. Thomas Jefferson, the secretary of state, started out with six people in his department. Henry Knox, the secretary of war, started out with twelve. Alexander Hamilton, because he had customs inspectors and revenue collectors, suddenly had hundreds of people, so his department was more than 90 percent of the entire go
vernment.
DR: He created the U.S. Mint and the U.S. Coast Guard at the same time. How did he do that?
RC: The main source of government revenue at the time was from customs duties, so Hamilton created a customs service. There was a lot of smuggling, so he created a fleet of revenue cutters to intercept smugglers. That fleet of revenue cutters became the Coast Guard. Hamilton was really more like the prime minister than just treasury secretary.
DR: One of the big issues was who was going to pay off seventy-some million dollars of Revolutionary War debt. Hamilton had a plan, and ultimately there was a compromise at a famous dinner. Can you describe what happened?
RC: Again, just let me say that the United States was literally bankrupt when Washington was sworn in as the first president. American debt was selling at ten or fifteen cents on the dollar.
Any other regime after a revolution would have just repudiated the debt. Hamilton felt that, as a matter of both American honor and American pride and American credit, that debt had to be paid off in full at par value. The centerpiece of his plan was to assume state debt. There was $50 million in federal debt, $25 million in state debt.
It seems counterintuitive. Why would any treasury secretary voluntarily take on additional debt? Hamilton realized that, if he assumed state debt, the federal government forever after would have a lock on the main revenues of the country. To this day, I think that that assumption of state debt is the reason we pay more in federal taxes than in state and local taxes.
Now, Hamilton had a lot of trouble getting that through Congress, but he struck a deal over dinner with Jefferson and Madison. He agreed to have the new U.S. capital on the Potomac River if they would get him a few extra votes from the South on the assumption of state debt by the federal government.
Thomas Jefferson later said it was the single biggest mistake of his political career. It sounded like a technocratic thing, the assumption of state debt. He didn’t realize that Hamilton had a whole political agenda buried in that to strengthen the central government.
DR: At the time, the capital was New York. The agreement was it would then go to Philadelphia for ten years. And after those ten years, Washington, D.C., would be built. We’re here because of that dinner. After George Washington got reelected, Hamilton decided to stay for how much longer?
RC: Hamilton stayed one year into the second term and went back to being a lawyer in New York.
DR: Why did he leave?
RC: This will not come as a surprise to anyone in this room. He’d made tremendous financial sacrifices for public service.
DR: The salary of the secretary of the treasury in those days was—
RC: It was very low.
DR: Two or three thousand dollars?
RC: Yes. He could make much, much more money as a lawyer in New York. Alexander and Eliza Hamilton ended up having eight children, so he had a lot of bills.
Also, to give you some idea of the success of his program, when he became treasury secretary, we were the deadbeat of world finance. We were in arrears on both the principal and interest on our debt. By the time that Alexander Hamilton left the Treasury five years later, we commanded interest rates as low as any country in the world. Our credit was as high as any of the Western European powers.
DR: When they were in the cabinet, Jefferson was secretary of state and Hamilton was secretary of the treasury. How bad was the relationship? Did they ever get along?
RC: No. Hamilton later said that from the day Jefferson arrived in New York, Jefferson was gunning for him. It was partly there was certainly a personality difference between them. Jefferson was a rather shy, courtly person. Hamilton had a real zest for political combat and polemics.
But they also had two fundamentally differing visions. In terms of the economy, Jefferson wanted a nation based on small towns and traditional agriculture. Hamilton wanted that plus large cities, stock exchanges, banks, factories, corporations—in other words, the world that we know today.
Then there was also the political difference. Jefferson wanted a weak central government, legislative power, strict construction of the Constitution. Hamilton wanted a strong central government, executive power, and a very expansive interpretation of the Constitution. They really started the debate we still have.
DR: In those days, even if you were in the same president’s cabinet, you apparently hired surrogates to write negative articles about other people in the cabinet.
RC: While he was treasury secretary, Hamilton liked writing articles under Roman pseudonyms, which was fairly common at the time. In the middle of one controversy, he started secretly writing essays praising the treasury secretary under the pen name of Camillus.
Then he launched another series under the pen name of Philo Camillus. And Philo Camillus kept praising Camillus, and they both kept saying that the treasury secretary was the most brilliant man in America.
DR: What did they say about Jefferson?
RC: Much less complimentary things.
DR: Madison and Hamilton cooperated on writing The Federalist Papers. How did that relationship go later on?
RC: It sank over an issue that was known as discrimination. I mentioned that the debt was selling for ten or fifteen cents on the dollar. Hamilton announced his plan to redeem all the debt at face value, and the value of that debt soared.
A lot of it was originally in the form of IOUs that had been given to soldiers during the Revolutionary War. Many of them, desperate for money after the Revolution, sold those pieces of paper at depressed prices. Speculators gathered them up and made a killing on Hamilton’s plan.
Madison said, “Let’s track down those original soldiers who sold their IOUs. They should be the ones who profit from the appreciation in value.” Hamilton opposed the idea, even though he was the one who had been a soldier during the war, not Madison.
Hamilton said two things. He said, number one, tracing back all the owners of a security administratively would be a nightmare. The second point was much more important. He said, “I understand that this is hard to swallow, but we have to establish forever the principle that anyone who owns a stock or a bond or any kind of security has, in purchasing that security, assumed all of the risk and all of the reward for it.” So it’s really the basis of our modern financial markets.
DR: George Washington decided not to run for a third term, and he gave a farewell address. Did Hamilton write that farewell address?
RC: Yes, Hamilton did write the farewell address.
Washington gave him two options. He had thought of stepping down at the end of his first term, and he’d had Madison write a farewell. He gave Hamilton Madison’s farewell address and said, “You can either revise Madison’s farewell address or trash it and start anew.”
Anyone who knew Alexander Hamilton knew what decision he would make in that situation. He wrote a completely new farewell address.
He used to tell the story that he and Eliza were walking down the street in New York one day after it had been published in pamphlet form, and a vendor on the street tried to sell him a copy of Washington’s farewell address. He turned to his wife afterward and laughed. He said, “That man tried to sell me a copy of my own writing.”
DR: Hamilton wanted to retain political influence. When Washington stepped down, the next election was between John Adams and Thomas Jefferson. What role did Hamilton play in that election?
RC: Hamilton and John Adams were the two leading figures in what was known as the Federalist Party. Hamilton had started out with a lot of respect for Adams as one of the original venerable figures of the Revolution, but their relationship became really pathological.
Adams saw Hamilton as this conceited upstart who had overshadowed him. Hamilton saw Adams as crotchety and temperamental and difficult. So their personal relationship was very bad.
Two things that Adams said about Hamilton—one was that “Hamilton has a superabundance of secretions which he cannot find whores enough to draw off.” And we think the st
yle of political play is rough nowadays.
He also—and this, I think, was far more painful to Hamilton—called him “the Creole bastard,” which was simultaneously sticking it to him in terms of saying he was biracial, which some people imagined he might have been, and also that he was illegitimate. And nothing pained Hamilton more than that.
Hamilton, of course, gave as good as he got. He said of Adams, “I think the man is mad and I shall soon be led to say as wicked as he is mad.”
DR: They were both members of the Federalist Party. Did Hamilton get Adams elected president?
RC: No. Adams ran in 1796. Under the rules of the day, Jefferson was the runner-up and therefore became vice president.
Adams and Hamilton continued to have a very stormy relationship up to the point in 1800 when Adams ran for reelection. Hamilton—again, not one of his finest moments—published an open letter to John Adams. It was really a pretty cruel diatribe about him that, I think, injured Hamilton much more than it injured Adams. But, of course, Jefferson won the election.
DR: Adams was elected to the White House just once. During that period of time, there was in effect a quasi war. We thought the French were going to invade the United States, and Adams asked George Washington to lead an army to repel them. What did Washington say about what he needs to do to pull it off?
RC: Washington was, after forty years of public service, happily retired in Mount Vernon at that point. Adams sent Washington’s name to the Senate before Washington even knew what was happening.
Washington then did something that flabbergasted Adams. He said, “I will only take the job”—which was to lead a provisional army of ten thousand people in case France invaded—“I’ll only take the job if I can have Alexander Hamilton as my inspector general,” which was the number-two job.
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