The Great Divide

by Thomas Fleming

  In another letter to Jefferson, Madison feared “the stockjobbers will become the praetorian band of the government, at once its tool & its tyrant.” (In ancient Rome, the Praetorian Guard was the emperor’s private army, which could, and sometimes did, threaten both the unruly populace and the ruler.) Madison was convinced that the stockjobbers could be bribed by Congress’s “largesses” or could overawe it “with clamours and combinations.” He gloomily concluded that his imagination would not “attempt to set bounds to the daring depravity of the times.”13

  The enthusiasm of these first investors was unquestionably extreme, and merited some concern. But the apocalyptic reaction of Jefferson and Madison was even more extreme. It revealed a profound hostility to the very idea of public finance. Hamilton’s successful intervention in the scrippomania bubble enabled President Washington to remain enthusiastic about the new financial system. He told one correspondent that the eagerness to buy shares in the Bank of the United States was “unexampled proof of the resources of our countrymen and their confidence in [the] public measures” of the new federal government.14

  What explained the almost instinctive hatred of banks and a stock market that Thomas Jefferson and James Madison displayed? From the perspective of 2014, these two gifted men sound like maniacs. The investors of 1791 were doing something that tens of millions of contemporary Americans do every day—invest in bonds or stocks. Mere dislike of Alexander Hamilton or jealousy of his growing power and influence is not enough to explain such frantic extremism. Why did not President Washington, a man who said seeing America a happy nation was “the first wish” of his soul, watch this birth of a commercial spirit with similar horror and dread? To understand this phenomenon, which continues to have relevance in the twenty-first century, requires a trip back in time to England in the early eighteenth century.

  Under Prime Minister Robert Walpole in the 1720s, the British government became a centralized engine that made Britain the strongest nation in Europe. Its taxation system enabled it to sustain a large fleet and a standing army. It chartered and helped finance the East India Company and other corporations that extended the reach of the empire and earned huge profits for private investors. To manage this international colossus, Walpole used titles, honors, and other favors, including occasional bribery, to persuade leading members of Parliament to support his policies.15

  Simultaneously, a vocal opposition to this centralization arose. Claiming to speak for the majority of the people, they called themselves the “country” party, who opposed the “corruption” of the “court” party. The very terms were polemical. Soon newspapers and books were full of angry exchanges between true believers on both sides. The argument was followed with fascination by intelligent men in the thirteen colonies. The majority of Americans sympathized with the country party, especially after Parliament began asserting more and more power over all parts of the empire. They adopted the chief argument of the opposition, that the court party was drenched in corruption and was steadily destroying British liberty, both at home and abroad. This rhetoric became an essential part of the vocabulary used to justify the American Revolution.

  The country party liked to portray themselves as idealists who wanted to regain a largely mythical past, when stalwart yeomen voted their consciences on behalf of the public good. Over the horizon in an equally mythical future, they saw a land where justice prevailed, under a “patriot king” who adjudicated the differences between the quarreling factions. Both Thomas Jefferson and James Madison had absorbed this ideology in their collegiate youth, and when they saw its supposed lessons being ignored by Alexander Hamilton, they reacted with ideological fury.16

  Again, we must ask why President Washington did not share these fierce emotions. Here we come close to defining the essential difference between Thomas Jefferson and George Washington. For Jefferson, liberty was a sacred, semi-religious goal. He saw a future in which America’s independent farmers were liberty’s best guardians. Thanks to them, the nation would demonstrate the perfectability of human nature. This utopian faith was at the root of his passionate support of the French Revolution, as well as his determination to keep the supposed corruptions of commerce out of America’s future.

  Washington was the polar opposite of a utopian. He drew his own conclusions about politics and business, rooted largely in his experiences. He had no prejudice against the commercial world. Premier merchant Richard Morris was one of his closest friends. Nor was he in the least shocked to hear Hamilton praise merchants and other men of business as vital to America’s future.

  While President Washington was touring the South, Thomas Jefferson had an encounter with Alexander Hamilton that confirmed his worst suspicions. The President had suggested that the members of the cabinet meet with Vice President John Adams and discuss any decisions that the government needed to make in his absence. One April evening, after discussing official business at a dinner party at Jefferson’s residence, the talk turned to theories of government. For a while, Adams pontificated about the virtues of Britain’s “balanced” government and its distribution of power between the king, the lords, and the commons. The problem with this arrangement, Adams added, was the “corruption” that gave the king and his ministers too much influence over the House of Commons. This was straight country party doctrine, virtually from the mouth of its most famous spokesman, Lord Bolingbroke.

  Hamilton disagreed with the Vice President. He said that if by some miracle the British government were purged of corruption, the result would be “impracticable.” In his opinion, the present system, with its supposed corruption, was “the most perfect government that ever existed.” Hamilton was expressing his admiration for the way Prime Minister Walpole’s successors had created a wealthy and powerful nation. But Jefferson—and probably Adams—heard him with minds steeped in the long struggle between Britain’s country and court parties.

  To them, Hamilton’s words were a veritable confession of his admiration for the ruthless men and evil deeds that would eventually snuff out all traces of liberty in the mother country. For Jefferson, the behavior of the first investors in the Bank of the United States confirmed this judgment with a certainty that would dominate his mind for the rest of his life.

  Even before the Bank of the United States began selling its shares to clamorous customers, Jefferson and Madison had decided it was time to do more than express their disapproval of Hamilton’s program to a small circle of friends. In the spring of 1791, they took a trip to northern New York, which Jefferson described to President Washington as a remedy for the headaches that kept disturbing his health. In discussing it with others, he called it a “botanical” expedition to discover new flowers and fauna in that part of America.

  The journey’s real purpose was political. The Virginians spent time with Chancellor Robert R. Livingston, head of a powerful and wealthy Hudson River Valley clan. They also met with Senator Aaron Burr, who had recently defeated Hamilton’s father-in-law, Philip Schuyler, in his bid for reelection. They may also have seen Governor George Clinton. These gentlemen, especially Clinton, were united by personal dislike of Secretary of the Treasury Hamilton. Although the word “party” was still taboo, there was little doubt that the Secretary of State and the Congressman were seeking the support of these men in the months to come.

  Back in New York City, the peripatetic Virginians spent not a little time with Madison’s college roommate, Philip Freneau. Known as “the Poet of the Revolution,” for verses he had published about his experience aboard a British prison ship in New York Harbor, the New Jersey–born Freneau was writing a column for a New York newspaper in which he revealed a hatred of all things British. He was more than ready to denounce Hamilton and his rich friends as enemies of the poor and middling classes, of which he was eminently one. Madison and Jefferson urged him to come to Philadelphia and launch a newspaper that would express their mutual fear and detestation of the Treasury Secretary’s attempt to shape the federal government a
long British lines.

  The penniless Freneau, with a growing family and no means of support but some unproductive acres of farmland in South Jersey, first said yes, then changed his mind a month later. Jefferson was so disappointed, he journeyed back to New York and spent an entire day trying to repersuade the indecisive poet. It would take another effort by Madison to convince him to enter the political fray. Whereupon a delighted Jefferson offered Freneau a job as a translator in the office of the secretary of state. This was—and remains—a unique performance—giving a newsman a government salary to attack the administration in which his patron was supposedly a loyal partner.17

  Over the next twelve months, Madison, in close and constant consultation with Jefferson, contributed eighteen unsigned essays to Freneau’s paper, the National Gazette. All were attacks on Hamilton’s program. President Washington remained unaware of this secret assault on his administration by a man whom he still considered his closest advisor. In the same month of October 1791 that Freneau began publishing his paper in Philadelphia, Madison drafted Washington’s annual message to Congress and chaired the committee that responded to it. A few days later, in the first edition of the National Gazette, Freneau accused Alexander Hamilton of being the head of a “monarchist” group plotting to destroy the republic. He also hailed Thomas Jefferson as a “colossus of liberty.”18

  Perhaps we should pause here to puzzle over Madison’s duplicity. In most of the dealings of his long life, he was an honorable and honest man. The best explanation for his becoming two-faced in his relationship to President Washington may well be Thomas Jefferson’s role in the Congressman’s political and personal life. From the earliest days of their relationship Jefferson had been the leader, Madison his intelligent, but usually subordinate, advisor.

  This did not mean subservience. We have seen how Madison tactfully disagreed with some of Jefferson’s wilder ideas, such as the earth belongs to the living. But Jefferson’s current role in Washington’s cabinet fused with his fame as the drafter of the Declaration of Independence and his experience as ambassador to France to become an overpowering combination in 1791. Writing to Jefferson around this time, Madison assured him that he was always ready “to receive your commands with pleasure.”19

  While Freneau published more and more biting attacks on Hamilton, Secretary of State Jefferson remained ostensibly neutral. A Philadelphia printer inadvertently destroyed this disguise. Jefferson had reacted with disgust and rage at Edmund Burke’s essay, “Reflections on the Revolution in France.” The Irish orator predicted the upheaval’s collapse into bloodshed and anarchy, ending in a dictatorship. The Secretary of State was doubly pleased when Thomas Paine responded with a vigorous assault on Burke, The Rights of Man.

  Jefferson particularly liked Paine’s claim that “every age and generation must be free to act for itself in all cases… The vanity of governing beyond the grave is the most ridiculous and insolent of all tyrannies.” He also approved Paine’s condescending view of the British people as passive victims of “the feeble and crazy” George III. He was even more enthusiastic about Paine’s denunciation of the British centralized financial system, which resulted in “a monied interest [class]” that controlled the nation. “It is power, not principles, that Mr. Burke venerates,” Paine sneered.20

  Paine was so confident that he was enunciating American principles, he dedicated The Rights of Man to George Washington and shipped fifty copies of the polemic to the President. Jefferson sent a copy of the book to a Philadelphia printer with a covering letter expressing his pleasure “that something is at length to be said against the political heresies that have sprung up amongst us.” The printer converted the letter into an introduction to the book.

  An uproar exploded. The agitated Secretary of State assured President Washington that he had never intended his letter to be made public. Jefferson claimed he was criticizing the essays that Vice President John Adams had been publishing in John Fenno’s Gazette of the United States about the long-dead historian, Enrico Davila. Recent essays had expressed grave doubts about relying on unstable public opinion and stubbornly called for a society ruled by rank and distinction, in which titles would be conferred on the “natural aristocracy” of America. No one had any trouble agreeing that this was a theory almost laughably wrong for the United States.

  Into the uproar barged a talented Adams defender. A series of hard-hitting essays signed by someone using the pseudonym “Publicola” accused Jefferson of being the real heretic for backing Tom Paine’s ideas. Jefferson assured Paine that Publicola represented “a sect high in names but small in number.” The sarcasm suggests that he assumed Publicola was the Vice President. In fact, the writer was Adams’s son, twenty-four-year-old John Quincy Adams, making his first appearance on the public stage. He was writing without asking his father’s permission. His eleven Publicola essays were widely read and reprinted as a pamphlet in England, where they were very popular. That was not surprising. John Quincy agreed wholeheartedly with his father’s—and Edmund Burke’s—pessimistic view of the French Revolution.

  Only when the controversy subsided two months later did Jefferson try to rescue his friendship with John Adams. He claimed his letter to the printer grew from his belief that “truth, between candid minds, can never do harm.” Adams coolly expressed surprise. He had no recollection of ever discussing theories of government with Jefferson. He also denied he was Publicola but assured Jefferson that their friendship was still “very dear to my heart.”21

  Far more significant are the letters Jefferson exchanged with James Madison about this incident. Jefferson assured Madison that he believed Adams was a heretic, but “certainly never meant to step into a public newspaper with that in my mouth.” Then came more revealing words. Colonel Hamilton was “open-mouthed against me,” claiming that “it [the introductory letter for The Rights of Man] marks my opposition to the government.” In a pained tone, Jefferson claimed that Hamilton was attempting to turn on the government “those censures I meant for the enemies of the government, to wit, those who want to change it into a monarchy.”

  Jefferson added that he “had reason to think he [Hamilton] has been unreserved in uttering these sentiments.” This was a glimpse of a distinction that would cause Jefferson trouble for the rest of his life. He drew a line between what he said in a private letter and what he said in public discourse. Hamilton had violated this rule by being “open-mouthed” with his opinion. But Jefferson constantly used private letters to influence public policy—and only retreated to the other meaning of private when his opinions stirred criticism or opposition. As a public man, he also refused to recognize that very little of what he said was a private matter.22

  Madison replied that he had never entertained for a moment anything but a firm belief that Vice President Adams’s ideas were ridiculous. Hamilton’s pro-British views—and his growing power—was the heresy they had to fear. Madison said he saw nothing wrong with a public servant—Jefferson—endorsing a book (The Rights of Man) that defended “the principles on which ‘that Govt is founded’”—and Hamilton was violating.

  In view of these convictions, it is not hard to imagine Jefferson’s and Madison’s reaction to a new report that Secretary of the Treasury Hamilton sent to Congress in mid-December 1791—a proposal to create a Society for the Establishing of Useful Manufactures that the federal government would help to fund, along with private investors. Hamilton wrote a prospectus, with the help of Assistant Secretary of the Treasury Tench Coxe, a strong advocate of an industrial America. The S.U.M. would encourage and promote factories that would launch the United States as an industrial power, aimed at challenging British dominance of this rapidly growing segment of the world’s economy. Hamilton summed it up with a bold sentence that was the equivalent of a war cry: “Both theory and experience conspire to prove that a nation…cannot possess active wealth but as a result of extensive manufactures.”

  The Society called for the creation of a city dev
oted to manufacturing. It would be named Paterson, after the popular governor of New Jersey, who had persuaded his legislature to charter it. Would-be investors rushed to buy shares in the S.U.M, which could be paid for in part with stock in the Bank of the United States. The initial offering of $500,000 sold out almost immediately. Soon the shares were rising dramatically and Americans began discussing the prospect of producing the long list of goods that Hamilton mentioned in his prospectus, from paper to cotton and linen textiles to blankets and beer.23

  For Jefferson and Madison, this was ultimate proof that Hamilton was determined to transform America along British lines, with an inevitable final touch—the crowning of a king. Soon a pseudonymous James Madison was telling readers of the National Gazette that Hamilton’s policies were based on “the principles of aristocracy and monarchy, in opposition to the Republican Principles of the Union, and the Republican spirit of the people.”24

  A war had begun—a struggle for the public mind—the political soul—of George Washington’s America. At stake was the future of the experiment in independence to which he had devoted his life.

  CHAPTER 10

  When Best-Laid Plans Go Wrong

  NOT MANY PEOPLE SAW George Washington lose his temper. His self-control was legendary. But when he lost it, the explosion was something witnesses never forgot. One of the most historic detonations occurred on December 9, 1791, when a messenger from Secretary of War Henry Knox arrived at the President’s Philadelphia mansion while Washington was entertaining guests at dinner. His secretary, Tobias Lear, hurried into the dining room and whispered that there was news from the West.