Alexander Hamilton (28 page)

In his spare time, Hamilton pored over financial treatises. As Washington’s aide, he was not at liberty to issue controversial plans that might jeopardize congressional relations, so he drafted a clandestine letter to an unidentified congressman and outlined a new currency regime. “The present plan,” he started humbly, “is the product of some reading on the subjects of commerce and finance[,]...but a want of leisure has prevented its being examined in so many lights and digested so maturely as its importance requires.”
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If the recipient wished further explanation, Hamilton indicated that “a letter directed to James Montague Esqr., lodged in the post office at Morristown, will be a safe channel for any communications you may think proper to make and an immediate answer will be given.”
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“James Montague” may have been a name devised by Hamilton to cloak his own identity.

Hamilton’s six-thousand-word letter attests to staggering precocity. He saw that inflation had originated with wartime shortages, which had led, in turn, to the waning value of money. Over time, the inflation had acquired a self-reinforcing momentum. Economic fundamentals alone could not account for this inflation, Hamilton noted, detecting a critical psychological factor at work. People were “governed more by passion and prejudice than by an enlightened sense of their interests,” he wrote. “The quantity of money in circulation is certainly a chief cause of its decline. But we find it is depreciated more than five times as much as it ought to be.... The excess is derived from opinion, a want of confidence.”
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How to remedy this want of confidence? Hamilton submitted a twelve-point program, a fully realized vision of a financial system that reflected sustained thinking. Congress should create a central bank, owned half by the government and half by private individuals, that could issue money and make public and private loans. Drawing on European precedents, Hamilton cited the Bank of England and the French Council of Commerce as possible models. Taxes and domestic loans could not finance the war alone, he argued, and he pressed for a foreign loan of two million pounds as the centerpiece of his program: “The necessity of a foreign loan is now greater than ever. Nothing else will retrieve our affairs.”
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He recognized that French and British political power stemmed from those countries’ ability to raise foreign loans in wartime, and this inextricable linkage between military and financial strength informed all of his subsequent thinking.

For Hamilton the American Revolution was a practical workshop of economic and political theory, providing critical object lessons and cautionary tales that charted the course for his career. In May 1780, he had fresh cause to meditate on the failings of Congress when news came of a calamitous defeat: the British had taken Charleston, capturing an American garrison of 5,400 soldiers, including John Laurens. The year 1780 was to be a dismal one for the patriots. In August, Cornwallis inflicted a stinging loss on General Horatio Gates in Camden, South Carolina, killing nine hundred Americans and taking one thousand prisoners. For Hamilton, the terrible drubbings at Charleston and Camden drove home the need for longer enlistment periods and an end to reliance on state militias. He found some consolation in the fact that Gates had fled from Camden in terror, barely containing his glee at this sign of cowardice. “Was there ever an instance of a general running away, as Gates has done, from his whole army?” he gloated to New York congressman James Duane. “One hundred and eighty miles in three days and a half. It does admirable credit to the activity of a man at his time of life.”
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By October, General Nathanael Greene had replaced the disgraced Gates as commander of the Southern Army.

To the setbacks in South Carolina, Hamilton reacted with stoic resignation as well as schadenfreude. “This misfortune affects me less than others,” he told Eliza Schuyler, “because it is not in my temper to repine at evils that are past but to endeavour to draw good out of them, and because I think our safety depends on a total change of system. And this change of system will only be produced by misfortune.”
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He did not mention that he had just rushed off a seven-thousandword letter to James Duane that showed that the future American government was already fermenting in his hyperactive brain. He now subjected the Articles of Confederation to a searching critique. He thought the sovereignty of the states only enfeebled the union. “The fundamental defect is a want of power in Congress,” he declared. He favored granting Congress supreme power in war, peace, trade, finance, and foreign affairs.
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Instead of bickering congressional boards, he wanted strong executives and endorsed single ministers for war, foreign affairs, finance, and the navy: “There is always more decision, more dispatch, more secrecy, more responsibility where single men than when bodies are concerned. By a plan of this kind, we should blend the advantages of a monarchy and of a republic in a happy and beneficial union.”
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Hamilton was especially intent upon subjecting all military forces to centralized congressional control: “Without a speedy change, the army must dissolve. It is now a mob, rather than an army, without clothing, without pay, without provision, without morals, without discipline.”
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Then, in the most startling, visionary leap of all, Hamilton recommended that a convention be summoned to revise the Articles of Confederation. Seven years before the Constitutional Convention, Alexander Hamilton became the first person to propose such a plenary gathering. Where other minds groped in the fog of war, the twenty-five-year-old Hamilton seemed to perceive everything in a sudden flash.

At the end of the letter, Hamilton apologized to Duane for having written down his ideas so hastily. The wonder, of course, is that he had recorded them at all. In mid-July, a French fleet had arrived off Newport, Rhode Island, with an army of 5,500 men commanded by the short, stocky comte de Rochambeau. This was the French army that Hamilton had suggested to Lafayette as necessary to the war effort and that Lafayette had successfully urged at Versailles. As soon as the French arrived, Hamilton was worn down with tremendous duties. Before meeting with Rochambeau at Hartford in late September, Washington asked his aide-de-camp to draw up three scenarios for joint military operations with the French. Hamilton must have been exhausted as he scratched out his long letter to Duane by candelight at day’s end.

One might have thought that Hamilton, despite all the military uncertainty, would feel hopeful about his life. He was effectively Washington’s chief of staff, was soon to be married to Elizabeth Schuyler, and was drafting high-level strategy papers and comprehensive blueprints for government. Yet, underneath his high spirits still lurked the pessimism from his West Indian boyhood, and he sometimes viewed the world with a jaundiced, even misanthropic, eye. Perhaps too much had happened too soon and it had all been disorienting. He was critical of his compatriots. “My dear Laurens,” he had written to his friend that spring, “our countrymen have all the folly of the ass and all the passiveness of the sheep in their compositions.”
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As he became more outspoken in his views, he discovered his own capacity for making enemies. On September 12, he told Laurens that everybody was angry with him. Some people thought he was “a friend to military pretensions, however exorbitant,” while others chided him for not being militant enough in defending army power: “The truth is I am an unlucky honest man that speaks my sentiments to all and with emphasis. I say this to you because you know it and will not charge me with vanity. I hate congress—I hate the army—I hate the world—I hate myself. The whole is a mass of fools and knaves. I could almost except you and [Richard Kidder] Meade. Adieu. A. Hamilton.”
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Throughout his career, Hamilton had a knack for being present at historic moments; in September 1780, he was eyewitness to the treachery of General Benedict Arnold. Born in Norwich, Connecticut, Arnold had started out as a druggist and bookseller and expanded into speculative business ventures. A brave soldier and a student of military history, Arnold had distinguished himself in numerous clashes with the British and was wounded by a musket ball in the winter assault on Quebec. He fought so lustily at Saratoga, where he was injured again, that Hamilton and others had hailed him as the true, unacknowledged hero of the victory. As military governor of Philadelphia during the patriot occupation, however, Arnold was harried by charges of corruption, which he indignantly dismissed as “false, malicious, and scandalous.”
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He was exonerated of all but two minor charges by a courtmartial and got off with a reprimand from Washington. Yet by this point, the embittered Arnold, increasingly dubious about American prospects, had decided to engage in treason, relaying secret information about troop movements to the British. After being named the new commandant of West Point, he colluded to deliver plans of the fortifications to the British, making the stronghold vulnerable to attack. In exchange, Arnold was promised money and a high-level appointment in the British Army.

Arnold took up his West Point command during the summer of 1780 and let its defenses fall into disrepair. On the morning of September 25, Washington and a retinue that included Hamilton and Lafayette were passing through the Hudson Valley as they returned from the conference in Hartford with the comte de Rochambeau. They planned to see Arnold and inspect West Point. Hamilton and James McHenry were sent ahead to prepare for Washington’s reception at Arnold’s headquarters in the Beverley Robinson house, a couple of miles downriver from West Point, on the east bank of the Hudson. During breakfast with the two aides, a flustered Arnold received a message indicating that a spy known as “John Anderson” had been seized north of New York City with descriptions of West Point’s defenses tucked into his boot. Hamilton and McHenry were perplexed by Arnold’s sudden agitation. Aghast that his plot had been foiled, Arnold raced upstairs to say good-bye to his wife, then slipped out of the house, hopped onto a barge, and fled downriver toward the British warship
Vulture.
Not long after, Washington showed up with his officers, noted Arnold’s absence with puzzlement, had breakfast, then rowed across the Hudson for his West Point tour.

Hamilton stayed behind to sort through dispatches and was unnerved by intermittent shrieks from Mrs. Arnold upstairs. When Arnold’s aide, Richard Varick, went up to investigate, he found her in a gauzy morning gown with disheveled hair. “Colonel Varick,” the distraught woman demanded, “have you ordered my child to be killed?”
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She then babbled on incoherently about hot irons being placed on her head. Twenty years younger than her husband, Margaret “Peggy” Shippen came from a Tory family in Philadelphia and had married Benedict Arnold at age eighteen the year before. She was a petite, ringleted blonde with small features and large social ambitions. When Hamilton went upstairs, he found her clutching her baby and accusing everyone in sight of wanting to murder her child.

Late in the afternoon, Washington returned to the house, befuddled by Arnold’s absence from West Point and its negligent defenses. Hamilton gave Washington a thick packet of dispatches, including papers discovered on the captured “John Anderson.” Hamilton then went off to confer with Lafayette. When the two young men returned, they found their usually composed commander fighting back tears. “Arnold has betrayed us!” Washington said with profound emotion. “Whom can we trust now?”
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He sent Hamilton and McHenry off on horseback, careering down the Hudson for a dozen miles, in the futile hope that they could overtake Arnold before he reached the safety of British lines. They arrived too late: Arnold was already aboard the
Vulture
and had been whisked off to New York City.

On the spot, Hamilton displayed uncommon self-reliance. Aware that West Point lay in imminent peril, he sent directions to the Sixth Connecticut Regiment to reinforce the fortress. Once again, he did not seem bashful about bossing around generals. “There has been unfolded at this place a scene of the blackest treason,” he wrote to General Nathanael Greene. “I advise you putting the army under marching orders and detaching a brigade immediately this way.”
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Hamilton hurried to Washington a letter just received from Arnold in which he blamed American ingratitude for his betrayal and sought to exonerate his wife: “She is as good and as innocent as an angel and is incapable of doing wrong.”
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Mrs. Arnold was still behaving bizarrely. After Varick ushered Washington into the room, the sobbing woman refused to believe it was the general: “No, that is not General Washington. That is the man who was a-going to assist Colonel Varick in killing my child.”
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Washington sat by the bedside and tried to console the hysterical woman. Washington, Hamilton, and Lafayette were all duped by Peggy Arnold’s command performance. They attributed her sudden raving to grief over her husband’s traitorous behavior. To their gullible minds, this behavior was proof that she must be a blameless victim of Arnold’s perfidy. In fact, she had been privy to the plot, having acted as conduit for some of her husband’s correspondence with the British, and she played her mad scene to perfection.

For all his supposed sophistication about womanly wiles, Hamilton was completely hoodwinked by Mrs. Arnold’s brazen charade. As always, he was hypersensitive to female charms, and well-bred ladies in distress especially brought out his chivalry. In a letter to Eliza that day, one can see how taken Hamilton was with Peggy Arnold:

It was the most affecting scene I ever was witness to. She for a considerable time entirely lost her senses.... One moment she raved, another she melted into tears. Sometimes she pressed her infant to her bosom and lamented its fate, occasioned by the imprudence of its father, in a manner that would have pierced insensibility itself. All the sweetness of beauty, all the loveliness of innocence, all the tenderness of a wife and all the fondness of a mother showed themselves in her appearance and conduct.... She received us in bed with every circumstance that could interest our sympathy. Her sufferings were so eloquent that I wished myself her brother to have a right to become her defender.
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