Albert Beveridge - The Life of John Marshall (Volume 2 of 4)

Hamilton's entire financial system was assailed with fury both in Congress and among the people. The funding plan, said its opponents, was a stock-jobbing scheme, the bank a speculator's contrivance, the National Assumption of State debts a dishonest trick. The whole was a plot designed to array the moneyed interests in support of the National Government. 154 154 This, indeed, was a portion of Hamilton's plan and he succeeded in it as he did in other parts of his broad purpose to combine as much strength as possible in support of the National Government. "The northern states and the commercial and monied people are zealously attached to … the new government." (Wolcott to his father, Feb. 12, 1791; Gibbs, i, 62.) Assumption of State debts was a device to increase the National power and influence and to lessen still more the strength and importance of the States. 155 155 This was emphatically true. From the National point of view it was the best feature of Hamilton's plan. The speculators, who had bought the depreciated certificates of the needy, would be enriched from the substance of the whole people.

Without avail had Hamilton answered every objection in advance; the careful explanations in Congress of his financial measures went for naught; the materials for popular agitation against the National Government were too precious to be neglected by its foes. 156 156 In his old age, John Adams, Hamilton's most venomous and unforgiving enemy, while unsparing in his personal abuse, paid high tribute to the wisdom and necessity of Hamilton's financial statesmanship. "I know not," writes Adams, "how Hamilton could have done otherwise." (Adams to Rush, Aug. 23, 1805; Old Family Letters , 75.) "The sudden rise of public securities, after the establishment of the funding system was no misfortune to the Public but an advantage. The necessity of that system arose from the inconsistency of the People in contracting debts and then refusing to pay them." (Same to same, Jan. 25, 1806; ib. , 93.) Fisher Ames thus states the different interests of the sections: "The funding system, they [Southern members of Congress] say, is in favor of the moneyed interest – oppressive to the land; that is, favorable to us [Northern people], hard on them. They pay tribute, they say, and the middle and eastern people … receive it. And here is the burden of the song, almost all the little [certificates of State or Continental debts] that they had and which cost them twenty shillings, for supplies or services, has been bought up, at a low rate, and now they pay more tax towards the interest than they received for the paper. This tribute , they say, is aggravating." (Ames to Minot, Nov. 30, 1791; Works : Ames, i, 104.) "The first regular and systematic opposition to the principles on which the affairs of the union were administered," writes Marshall, "originated in the measures which were founded on it [the "First Report on the Public Credit"]." 157 157 Marshall, ii, 181. The attack on Hamilton's financial plan and especially on Assumption was the beginning of the definite organization of the Republican Party. (Washington's Diary : Lossing, 166.)

The Assumption of State debts was the strategic point of attack, especially for the Virginia politicians; and upon Assumption, therefore, they wisely concentrated their forces. Nor were they without plausible ground of opposition; for Virginia, having given as much to the common cause as any State and more than most of her sisters, and having suffered greatly, had by the sale of her public lands paid off more of her debt than had any of the rest of them.

It seemed, therefore, unjust to Virginians to put their State on a parity with those Commonwealths who had been less prompt. On the other hand, the certificates of debt, State and Continental, had accumulated in the North and East; 158 158 Gore to King, July 25, 1790; King, i, 392; and see McMaster, ii, 22. and these sections were determined that the debt should be assumed by the Nation. 159 159 At one time, when it appeared that Assumption was defeated, Sedgwick of Massachusetts intimated that his section might secede. ( Annals , 1st Cong., April 12, 1790, pp. 1577-78; and see Rives, iii, 90 et seq. ) So the debate in Congress was heated and prolonged, the decision doubtful. On various amendments, sometimes one side and sometimes the other prevailed, often by a single vote. 160 160 Marshall's statement of the debate is the best and fairest brief account of this historic conflict. (See Marshall, ii, 181-90. See entire debate in Annals , 1st Cong., i, ii, under caption "Public Debt.")

At the same time the question of the permanent location of the National Capital arose. 161 161 "This despicable grog-shop contest, whether the taverns of New York or Philadelphia shall get the custom of Congress, keeps us in discord and covers us all with disgrace." (Ames to Dwight, June 11, 1790; Works : Ames, i, 80.) On these two subjects Congress was deadlocked. Both were disposed of finally by the famous deal between Jefferson and Hamilton, by which the latter agreed to get enough votes to establish the Capital on the Potomac and the former enough votes to pass the Assumption Bill.

Washington had made Jefferson his Secretary of State purely on merit. For similar reasons of efficiency Hamilton had been appointed Secretary of the Treasury, after Robert Morris, Washington's first choice, had declined that office.

At Jefferson's dinner table, the two Secretaries discussed the predicament and made the bargain. Thereupon, Jefferson, with all the zeal of his ardent temperament, threw himself into the contest to pass Hamilton's financial measure; and not only secured the necessary votes to make Assumption a law, but wrote letters broadcast in support of it.

"Congress has been long embarrassed," he advised Monroe, "by two of the most irritating questions that ever can be raised, … the funding the public debt and … the fixing on a more central residence… Unless they can be reconciled by some plan of compromise, there will be no funding bill agreed to, our credit … will burst and vanish and the states separate to take care every one of itself." Jefferson outlines the bargain for fixing the Capital and assuming the debts, and concludes: "If this plan of compromise does not take place, I fear one infinitely worse." 162 162 Jefferson to Monroe, June 20, 1790; Works : Ford, vi, 78-80; and see ib. , 76; to Gilmer, June 27, ib. , 83; to Rutledge, July 4, ib. , 87-88; to Harvie, July 25, ib. , 108. To John Harvie he writes: "With respect to Virginia the measure is … divested of … injustice." 163 163 Ib. ; and see also Jefferson to Eppes, July 25, ib. , 106; to Randolph, March 28, ib. , 37; to same, April 18, ib. , 47; to Lee, April 26, ib. , 53; to Mason, June 13, ib. , 75; to Randolph, June 20, ib. , 76-77; to Monroe, June 20, ib. , 79; to Dumas, June 23, ib. , 82; to Rutledge, July 4, ib. , 87-88; to Dumas, July 13, ib. , 96. Compare these letters with Jefferson's statement, February, 1793; ib. , vii, 224-26; and with the "Anas," ib. , i, 171-78. Jefferson then declared that "I was really a stranger to the whole subject." ( Ib. , 176.)

Jefferson delivered three Southern votes to pass the bill for Assumption of the State debts, and Hamilton got enough Northern votes to locate the National Capital permanently where it now stands. 164 164 Jefferson's statement; Works : Ford, vii, 224-26, and i, 175-77. Thus this vital part of Hamilton's comprehensive financial plan was squeezed through Congress by only two votes. 165 165 Gibbs, i, 32; and see Marshall, ii, 190-91. But Virginia was not appeased and remained the center of the opposition. 166 166 Henry, ii, 453. But Marshall says that more votes would have changed had that been necessary to consummate the bargain. (See Marshall, ii, footnote to 191.)