He saw, in the first place, that the most easily consolidated and timorous group was composed of the creditors, the financiers, bankers, and money lenders. He perceived that they were concentrated in the towns and thus were easily drawn together. He saw that by identifying their interests with those of the new government, the latter would be secure; they would not desert the ship in which they were all afloat. It has been charged that he leaned always on the side of the financial interest against the public as represented in the government; but it must be remembered that at the time the new system went into effect, the public had no credit, and financiers were not willing to forego their gains and profits for an abstraction. It is charged against him that he did not buy up government paper in behalf of the public at the most favorable terms; but to have done so would have diminished the profits of the very financiers whose good will was necessary to the continuance of the government.
The second group of interests which Hamilton saw ready for organization were the merchants and manufacturers who wished protective tariffs. He would have been blind, indeed, if he had not discovered and interpreted the widespread movement for protection which was swiftly gathering headway during the years preceding the formation of the Constitution. He was not blind. His first report on manufactures show how keenly alive he was to the extent and diversity of the groups whose financial advantage lay in a system of protection. Whether this was for the good of the whole people need not be argued here. Hamilton’s relations were with the immediate beneficiaries. They were the men who were to throw their weight on the side of the new government. How persistently Hamilton sought to inform himself of the precise nature of the interests needing protection in the separate localities, from New Hampshire to Georgia, is evidenced by his unpublished correspondence with business men in all the commercial centres.[[221]]
The third interest which Hamilton consolidated was composed of the land speculators and promoters and embraced all the leading men of the time—Washington, Franklin, Robert Morris, James Wilson, William Blount, and other men of eminence.[[222]] This dealing in land was intimately connected with public securities, for a large portion of the lands were bought with land warrants purchased from the soldiers, and with other stocks bought on the open market at low prices. Hamilton saw clearly the connection of this interest with the new government, and his public land policies were directed especially to obtaining the support of this type of operators.[[223]]
Without the conciliation and positive support of these powerful elements in American society, the new government could not have been founded or continued. With keen insight, Hamilton saw this. He made no attempt to conceal it; for whatever may have been his faults he did not add the crime of demogogy. It is true that in private he often expressed a contempt for popular rule which is absent from his public papers; but his public papers contain a plain statement of his policies, and show why he considered them necessary to the strength and stability of the government.
Thousands of small farmers and debtors and laboring mechanics were opposed to his policies, but they did not have the organization or consciousness of identity of interests which was necessary to give them weight in the councils of the new government. They were partly disfranchised under the existing laws, and they had no leaders worthy of mention. The road to power and glory did not yet lie in championing their cause. It required the astute leadership of Jefferson, and the creation of a federal machine under his direction, to consolidate the heterogeneous petty interests against the Federalist group.
But during Hamilton’s administration, representatives of these smaller interests began to attack his policies as inimical to public interest, i.e., their own interests; and out of this attack grew the charge that Hamilton himself was privately engaged in augmenting his personal fortune by the methods which he had created for the advantage of public creditors and financiers generally. Although this charge, even if true, should not be allowed to obscure the real greatness of Hamilton’s masterly mind, and has little bearing upon a scientific application of the economic interpretation to the period, it deserves examination at length.
Rumors that Hamilton was personally interested in securities were persistent from the beginning of his career as Secretary of the Treasury, and in his famous Reynolds pamphlet, published in 1797, he precisely states the charge against himself: “Merely because I retained an opinion once common to me and the most influential of those who opposed me, that the public debt ought to be provided for on the basis of the contract upon which it was created, I have been wickedly accused with wantonly increasing the public burthen many millions in order to promote a stock-jobbing interest of myself and friends.”[[224]] That this heavy burden was necessary to secure the support of the financial interests concerned, and that their support was absolutely indispensable to the establishment of the new national system on a substantial basis, was admitted by many of Hamilton’s worst enemies; but this did not prevent their attacking the Secretary on mere rumors of private peculations.
It now remains to examine the evidence against Hamilton, and state the case fairly so far as our existing records will allow. In 1793, Hamilton was accused of a criminal violation of the laws, and laid under the suspicion of being a defaulter. The House of Representatives was so impressed with the charges that it appointed a committee to investigate the conduct of the Treasury Department, particularly with regard to the charge that Hamilton had made the public moneys “subservient to loans, discounts, and accommodations” to himself and friends.
The result of this investigation was a vindication of the Secretary by the committee on the basis of affidavits from the officers and employees of the various banks involved, public and private. Hamilton cites the report of this committee of the House as containing the “materials of a complete exculpation.”[[225]] But this investigation does not cover the dealings which Hamilton might have had with stock brokers and other persons handling public securities. Evidences of such relations would not have been contained in the public and private papers available to the committee. Indeed, on account of his intimate business relations with all the leaders who were buying and selling public securities, and, on account of the fact that he could have seen them personally at New York and Philadelphia, it would not have been necessary for him to make any written record of such transactions. But of the larger charges brought against him in Congress we may regard this report as a complete vindication.
The direct charge, however, that Hamilton had violated the solemn obligations of his own office by buying up public securities, as distinct from the charge that he had employed his high authority in the interests of his friends and his class, first took on a serious form in 1797, when the notorious pamphleteer J. T. Callender, in his History of the United States for the Year 1796 published a series of papers purporting to show that in 1791 and 1792 Hamilton had been engaged in speculative ventures with one James Reynolds and Mr. Duer.[[226]] It appears that in 1792 a Mr. Clingman, then in jail for a crooked transaction with the government, got into communication with Speaker Muhlenburg and hinted that a fellow-prisoner, Reynolds, had been associated with Hamilton in security operations, and had in his possession papers that would establish the facts in the case. Muhlenburg communicated with Monroe and Venable, and the three heard from Reynolds and his wife grave charges against the Secretary.