The charge was made soon after Hamilton's victory that it was largely due to the influence of speculators. The advance in the market value of securities produced by Hamilton's measures certainly gave an opportunity to speculators of which they availed themselves with the unscrupulous activity characteristic of the sordid tribe. Jefferson has left an account of "the base scramble." "Couriers and relay horses by land, and swift sailing pilot boats by sea, were flying in all directions. Active partners and agents were associated and employed in every state, town, and country neighborhood, and this paper was bought up at five shillings, and even as low as two shillings in the pound, before the holder knew that Congress had already provided for its assumption at par. Immense sums were thus filched from the poor and ignorant, and fortunes accumulated by those who had themselves been poor enough before."

This account is highly colored. The struggle was too close, and the issue was long too doubtful, to admit of speculative preparations extending to every "town and country neighborhood." If speculation took place on such a large scale, it must have been also taking risks on a large scale, for assumption was not assured until Jefferson himself put his shoulder to the wheel. The lack of means for prompt diffusion of intelligence naturally provided large opportunity for speculation by those in a position to keep well-informed, and undoubtedly large profits were made; but the circumstances were such that it seems most probable that profits were less than market opportunities would have allowed had not the issue been so long in doubt. Nevertheless there was much speculative activity, and the charge was soon made that it extended into Congress.[Footnote: This charge was put forth by John Taylor in pamphlets printed in 1793 and 1794, in which he reviewed the financial policy of the Administration and gave a list of Congressmen who had invested in the public funds. The facts on which this charge rests have been collected and examined by Professor Beard in his Economic Origins of Jeffersonian Democracy. His analysis shows that out of sixty-four members of the House, twenty-nine were security holders, and of these twenty-one voted for and eight voted against assumption. But the facts disclosed do not sustain his theory that the issue was essentially a conflict between capitalism and agrarianism. The assumption bill was lifted to its place on the statute book through the leverage exerted by Hamilton and Jefferson, with Washington's prestige as their fulcrum. The characters of these three men resist schemes of classification according to economic interest. The principal value of analysis of the economic elements of the struggle is to protect from undervaluation the motives that actuated the opposition to Hamilton's measures. The historian has the advantage of a perspective denied to participants in events, and this fact is apt to turn unduly to the discredit of lost causes.]

The passage of assumption was the turning point. Other important measures followed, but none of them met with difficulties which the Administration could not overcome by ordinary methods of persuasion and appeal. A national bank was authorized by an act approved on February 25, 1791. Hamilton's famous report on manufactures, a masterly analysis of the sources of national wealth and of the means of improving them, was sent to Congress on December 5, 1791. Upon his recommendation Congress established the mint, the only point which excited controversy being Hamilton's proposal that the coins should be stamped with the head of the President in whose administration they were issued. This suggestion was rejected on the ground that it smacked too much of the practice of monarchies. The queer totemistic designs of American coinage are a consequence of this decision.

The formation of national government by voluntary agreement is a unique event. The explanation of this peculiar result in the case of America is the unifying influence of Hamilton's measures. They interested in the support of the government economic forces strong enough to counteract the separatist tendencies that had always before broken up states unless they were held together by sheer might of power in their rulers. The means employed have been cited as evidence in support of the economic interpretation of history now in fashion. Government, it is true, like every other form of life, must meet the fundamental needs of subsistence and defense, but this truism supplies no explanation of the particular mode of doing so that may be adopted. Those needs account for motion but not for direction. Human will, discernment, and purpose enter and complicate the situation in a way that makes theories of determinism appear absurd. No one has ever contended that Hamilton was prompted by an economic motive in giving up his law practice to accept public office. He did so against the remonstrances of his friends, whose predictions that what he would get out of it for himself would be calumny, persecution, and loss of fortune, were all fully verified; but he possessed a nature which found its happiness in bringing high ideals to grand fulfillment, and in applying his powers to that object he let everything else go. Hamilton's career is one of the greatest of those facts that baffle attempts to reduce history to an exhibition of the play of economic forces.

CHAPTER IV

ALARUMS AND EXCURSIONS

The Shakespearian stage direction which heads this chapter appropriately describes the course of administrative experience while Washington was trying to get from Congress the means of sustaining the responsibilities with which he was charged by his office. Events did not stand still because for a time anything like national government had ceased. Before Washington left Mount Vernon he had been disquieted by reports of Indian troubles in the West, and of intrigues by Great Britain—which still retained posts that according to the treaty of peace belonged to the United States,—and by Spain which held the lower Mississippi. Washington applied himself to these matters as soon as he was well in office, but he was much hindered in his arrangements by apathy or indifference in Congress. He noted in his diary for May 1, 1790, communications made to him of a disposition among members of Congress "to pay little attention to the Western country because they were of the opinion it would soon shake off its dependence on this, and, in the meantime would be burdensome to it." From a letter of Gen. Rufus Putnam, one of the organizers of the Ohio company, it appears that in July, 1789, Ames of Massachusetts put these queries to him: "Can we retain the western country with the government of the United States? And if we can, what use will it be to them?" Putnam wrote a labored article to the effect that it was both feasible and desirable to hold the West, but the character of his arguments shows that there was then a poor prospect of success. At that time no one could have anticipated the Napoleonic wars which ended all European competition for the possession of the Mississippi valley, and, as it were, tossed that region into the hands of the United States. There was strong opposition in Congress to pursuing any course that would require maintenance of an army or navy. Some held that it was a great mistake to have a war department, and that there would be time enough to create one in case war should actually arrive.

In a message to the Senate, August 7, 1789, Washington had urged the importance of "some uniform and effective system for the militia of the United States," saying that he was "particularly anxious" it should receive early attention. On January 18, 1790, General Knox submitted to Congress a plan to which there are frequent references in Washington's diary, showing the special interest he took in the subject. The report laid down principles which have long since been embraced by European nations, but which have just recently been recognized by the United States. It asserts: "That it is the indispensable duty of every nation to establish all necessary institutions for its protection and defense; that it is a capital security to a free state for the great body of the people to possess a competent knowledge of the military art; that every man of the proper age and ability of body is firmly bound by the social compact to perform, personally, his proportion of military duty for the defense of the State; that all men of the legal military age should be armed, enrolled, and held responsible for different degrees of military service." In furtherance of these principles a scheme was submitted providing for military service by the citizens of the United States beginning at eighteen years of age and terminating at sixty. The response of Congress was the Act of April 30, 1790, authorizing a military establishment "to the number of one thousand two hundred and sixteen non-commissioned officers, privates, and musicians," with permission to the President to call State Militia into service if need be, "in protecting the inhabitants of the frontiers." Washington, in noting in his diary his approval of the act, observed that it was not "adequate to the exigencies of the government and the protection it is intended to afford."

The Indian troubles in the Southwest were made particularly serious by the ability of the head-chief of the Creek nation, Alexander McGillivray, the authentic facts of whose career might seem too wildly improbable even for the uses of melodrama. His grandmother was a full-blooded Creek of high standing in the nation. She had a daughter by Captain Marchand, a French officer. This daughter, who is described as a bewitching beauty, was taken to wife by Lachland McGillivray, a Scotchman engaged in the Indian trade. A son was born who, at the age of ten, was sent by his father to Charleston to be educated, where he remained nearly seven years receiving instruction both in English and Latin. This son, Alexander, was intended by his father for civilized life, and when he was seventeen he was placed with a business house in Savannah. During the Revolutionary War the father took the Tory side and his property was confiscated. The son took refuge with his Indian kinsfolk, and acquired in their councils an ascendancy which also extended to the Seminole tribe. His position and influence made his favor an important object with all powers having American interests. During the war the British conferred upon him the rank and pay of a colonel. In 1784, as the representative of the Creek and Seminole nations, he formed a treaty of alliance with Spain, by the terms of which he became a Spanish commissary with the rank and pay of a colonel.

Against the State of Georgia, the Creek nation had grievances which McGillivray was able to voice with a vigor and an eloquence that compelled attention. It was the old story, so often repeated in American history, of encroachments upon Indian territory. Attempts at negotiation had been made by the old government, and these were now renewed by Washington with no better result. McGillivray met the commissioners, but left on finding that they had no intention of restoring the Indian lands that had been taken. A formidable Indian war seemed imminent, but Washington, whose own frontier experience made him well versed in Indian affairs, judged correctly that the way to handle the situation was to induce McGillivray to come to New York, though, as he noted in his diary, the matter must be so managed that the "government might not appear to be an agent in it, or suffer in its dignity if the attempt to get him here should not succeed." With his habitual caution, Washington considered the point whether he could send out an agent without consulting the Senate on the appointment, and he instructed General Knox "to take the opinion of the Chief Justice of the United States and the Secretary of the Treasury." The assurances obtained were such that Washington selected an experienced frontier commander, Colonel Marinus Willett of New York, and impressed upon him the importance of bringing the Indian chiefs to New York, pointing out "the arguments justifiable for him to use to effect this, with such lures as respected McGillivray personally, and might be held out to them."