By the middle of the summer (July 10th) Bank stock had risen as much in the market in New York as in Philadelphia with the feeling that there was a certainty of gain. A scramble had set in ‘for so much public plunder.’ The meticulously scrupulous Madison, with his lofty notions of official propriety, was shocked to find ‘the members of the Legislature who were most active in pushing this job openly grasping the emoluments.’ Schuyler, the father-in-law of Hamilton, was to be the head of the directors of the Bank ‘if the weight of the New York subscribers can effect it.’ Stock-jobbing monopolized all conversation. The coffee-houses buzzed with the gamblers.[340]
Meanwhile, from the high-placed to the ordinary scamp, men maddened, by the money-itch, were resorting to ordinary crime to get possession of public paper. In some places clever counterfeiters were driving through the country under the pretext of examining securities with the idea of purchase and cleverly exchanging the worthless for the real.[341] In the South and in the remote parts of Maine, swindlers were scouring the woods for State notes, lying to the uninformed and ignorant about their value, and getting them for a song. ‘What must be the feelings of the widow and orphan,’ wrote a correspondent of a Philadelphia paper, ‘when they find themselves thus defrauded of a great part of their little all, and that, not unlikely, the earnings of their late husbands and fathers, who died in the service of their country, by these pests of society who ought to be despised?’[342] But greed knew no shame. An appalling picture: members of Congress feathering their nest through their legislative acts, counterfeiters robbing the unwary, common crooks stealing from the Government by posing as the administrators of the dead, and distinguished members of the Boston Bar, like Otis and Gore, speculating with their clients’ money without their knowledge or consent.
So sinister was the situation that notes of warning began to appear in the newspapers. The ‘Pennsylvania Gazette’ found that speculators had ‘turned raving mad, and others so agitated that they appear on the borders of insanity.’[343] Fenno tried vainly to restore sobriety to the drunk—for Hamilton himself was shocked and not a little concerned.[344] Better be careful about parting with Bank scrip, warned the ‘New York Daily Advertiser.’ Efforts were being made to buy up all the scrip in the city ‘and for this purpose a powerful combination was formed ... on Saturday night to reduce the price.’[345] Beware of another South Sea Bubble, warned ‘Centinel’ in the same paper. ‘The National Bank stock has risen so high, so enormously above its real value, that no two transactions in the annals of history can be found to equal it....’[346]
From Boston came similar stories of the madness. All the while the New York papers were publishing day-by-day quotations on the scrip.[347] By August 15th the mania was at its height. ‘It has risen like a rocket,’ wrote an amused scribbler. ‘Like a rocket it will burst with a crack and down drops the rocket stick. What goes up must come down—so take care of your pate, brother Jonathan.’[348] The craze was becoming ridiculous. The sane and the honest looked upon it as a spectacle. Above the angry cries in the market-place rang the laughter of the observers who kept their heads. Some put their scoffing into verse:
‘What magic this among the people,
That swells a Maypole to a steeple?’[349]
Suddenly the bubble showed signs of bursting. A New York bank stopped discounting for some of the speculators. Messengers hurried forth with the ominous news, horses’ hoofs hammering the Jersey roads to Philadelphia, where there was consternation and a falling-off in buying.[350] Pay-day had not yet come, but it was on the way, and men began to regain their senses.
Then came the emergence of the political phase. ‘Does history afford an instance,’ asked one observer, ‘where inequality in property, without any adequate consideration, ever before so suddenly took place in the world? or the basis of the power and influence of an Aristocracy was created?’[351] A Boston paper commented significantly on the ease with which the mere opening and closing of the galleries of Congress could serve the purposes of speculation. ‘How easily might this be done should any member of Congress be inclined to speculate.’[352]
Thus the talk of a ‘corrupt squadron’ in the First Congress was not the invention of Jefferson—it was the talk of the highways and the byways, the coffee-houses and the taverns, and we find it recurring in the correspondence of the public men of the period. Everywhere sudden fortunes sprang up as if by magic. There was a rumbling and grumbling in the offing. With the people thinking more seriously of Madison’s fight for discrimination, he began to loom along with Jefferson as a prospective leader against the ‘system.’ With the discovery that the law had been violated in the subscription of more than thirty shares, it was hoped that it would ‘draw the attention of Madison ... immediately on the meeting of Congress’ and that ‘the whole proceedings ... be declared nugatory.’[353]
Then came the election of Bank directors in the fall, and indignation flamed when the prizes went to leaders in the Congress that had created the Bank—to Rufus King, Samuel Johnson of North Carolina, William Smith of South Carolina, Jeremiah Wadsworth of the ‘fast sailing vessels,’ John Laurance of New York, William Bingham of Philadelphia, Charles Carroll of Carrollton, George Cabot, Fisher Ames, and Thomas Willing, the partner of Robert Morris.
Members of Congress had speculated heavily and profitably on their knowledge of their own intent in legislation; they were owners of bank scrip of the Bank they created, and their leaders were on the board of directors. There was talk among the people of a ‘corrupt squadron,’ and Jefferson did not invent the term; he found it in the street and used it. Though Hamilton, scrupulously honest, was not involved in proceedings that were vicious, if not corrupt, many of his lieutenants were, and that, for the purposes of politics, made an issue.