Union and Democracy

by Allen Johnson

The need of further revenue was now imperative. As Hamilton said in his second report on the public credit, the duties on imported articles had reached a point which might not be exceeded "without contravening the sense of the body of the merchants." When Congress met for its third session in December, 1790, Hamilton boldly urged what was perhaps as unpopular a tax as he could have proposed—a duty on distilled spirits. To most Americans an excise was not only an internal tax, but as Jefferson said, "an infernal one." It was bound to fall with heavy weight upon the people of the interior who turned much of their corn and rye into whiskey, for more convenient transportation over the mountains to Eastern markets. But despite strenuous opposition the excise was voted. It was, as a member of Congress expressed it, like "drinking down the national debt."

In this same report of December 13, 1790, Hamilton advocated the establishment of a national bank. Such an institution, he believed, would increase the amount of active capital in the country and at the same time serve the Government as a fiscal agent in obtaining loans and in collecting taxes. Opposition to this project gathered rapidly and was encouraged by the Secretary of State. The debates in Congress touched upon the monopolistic tendency of such a banking institution and its constitutionality, rather than upon its intrinsic merits and demerits. The bill was carried by substantial majorities in February, 1791, and sent to the President for his approval.

Washington was so beset with doubts as to the constitutionality of the bank bill that he asked his secretaries and the Attorney-General to express their opinions. Jefferson argued that the power to incorporate a bank was not given by the Constitution to Congress, for it was not among the enumerated powers and it was not a power which belonged to any of the enumerated powers as indispensably necessary to their exercise. Hamilton deprecated this attempt to confine the general Government either to powers expressly granted or to powers absolutely necessary to carry out the enumerated powers. There was another class, he contended, which might be termed "resulting" powers. If the end to be gained by a measure was comprehended within the specified powers, and the measure was obviously a means to that end and not forbidden by the Constitution, then it was clearly within the compass of the national authority. Washington finally yielded to Hamilton's persuasions, and signed the bill.

The charter of the bank fixed the capital stock at ten million dollars, of which the Government was to subscribe one fifth; the rest was open to public subscription. Three fourths of the public subscriptions might be paid in bonds of the Government. The notes issued by the bank were made receivable for all payments to the United States. The bank was to be the repository of the government funds. Its management was committed to a board of twenty-five directors chosen annually, who could establish branch banks as they deemed advisable. The charter was to run for twenty years.

The stock of the bank was not only subscribed at once, but soon sold at a premium which invited the wildest sort of speculation in Philadelphia, New York, and Boston. Stock-jobbing became a mania. "The coffee house is in an eternal buzz with the gamblers," Madison wrote from the seat of government. Sinister aspects of this speculative craze soon began to appear. "Of all the shameful circumstances of this business," said Madison, "it is among the greatest to see the members of the Legislature who were most active in pushing this job openly grasping its emoluments." It was reported that Schuyler, Hamilton's father-in-law, was to head the board of directors.

As the wide reach of Hamilton's financial policy became clear, men like Madison, whose sympathies had hitherto been enlisted on the side of more efficient government, had grave misgivings. When the Secretary of the Treasury intimated in his report on manufactures that Congress might promote the general welfare by appropriating money in any way it chose, Madison definitely parted company with his former collaborator, holding that by such an interpretation of the Constitution "the Government is no longer a limited one possessing enumerated powers, but an indefinite one, subject to particular restrictions." Jefferson had already expressed himself in a similar way apropos of the bank bill. The suspicions which the Secretary of State entertained of his brilliant colleague were deep-seated. Hamilton's well-known preference for the British Constitution and his disposition to convert his secretaryship into a sort of chief ministerial office confirmed Jefferson's distrust. Had he and Madison been alone in their suspicions, their misgivings would not be worth recording; but they voiced the sentiments of an increasing number of men who disliked the consolidating tendencies of the new Government.

Moreover, the aristocratic tone of Washington and his entourage gave deep offense. Both by disposition and by calculation the President cultivated a certain official etiquette. His receptions were formal to the point of frigidity. He received his visitors "with a dignified bow, while his hands were so disposed as to indicate that the salutation was not to be accompanied with shaking hands." His figure clad in black velvet was most impressive. His hair was powdered and gathered in a large silk bag. His hands were dressed in yellow gloves, and he carried a cocked hat adorned with a black feather, while at his side hung a sword in a scabbard of white polished leather. To ardent republicans these trappings were so many manifestations of monarchical leanings. Hamilton's suggestion that coins should bear the head of the President under whom they were minted, was additional evidence to suspicious minds that the group of men who had the President's ear were monarchists at heart.

Before the First Congress adjourned, the nucleus of a new party was at hand and its fundamental tenet roughly foreshadowed: namely, opposition to the increase of the powers of the Federal Government through the use of implied powers and at the expense of the State Governments. The appearance of the first number of the National Gazette under the editorship of Philip Freneau was a sign that the further conduct of the Administration would be subjected to searching criticism. Freneau succeeded admirably in voicing the opinions of the nascent party. The columns of the National Gazette had much to say about "aristocratic juntos," "ministerial systems," and "the control of the government by a wealthy body of capitalists and public creditors," whose interests were in opposition to those of the people. When Hamilton's paper, the United States Gazette, attempted to stigmatize the opposition as essentially Anti-Federalist, Freneau replied that only those men were true friends of the Union who adhered to a limited and republican form of government and who were ready to resist the efforts which had been made "to substitute, in the room of our equal republic, a baneful monarchy." By posing as the only stanch supporters of republicanism, the opposition secured a great tactical advantage. To call one's self emphatically a Republican was to cast aspersions upon the republicanism of one's opponents.

As yet, however, there existed only tendencies toward parties and not clearly defined political groups. The voting in the early sessions of Congress was far from consistent. The members gave little indication that they regarded themselves as adherents of parties whose fortunes depended on preserving an unbroken alignment for or against the Government. How little coherence the opposition possessed was apparent when Giles, of Virginia, presented a resolution censuring Hamilton for his management of the Treasury. Despite the unpopularity of Hamilton and the general distrust of his policy in Republican circles, the opposition could muster only seven votes in favor of the resolution, in the closing hours of the Second Congress.

The presidential election of 1792, therefore, was not properly a contest between parties. When Washington consented reluctantly to serve a second term, his unopposed reëlection was assured. The Republicans expressed their opposition only by supporting for Vice-President, George Clinton, of New York, whose Anti-Federalism was well known, instead of John Adams, of Massachusetts. The congressional elections of this year resulted in the choice of men whose leanings were rather Republican than Federalist.