Jefferson and Hamilton (51 page)

A world away from Monticello, Alexander Hamilton remained deeply involved in politics. In the summer of 1793, just before Jefferson told the president of his unequivocal plans to retire, Hamilton had informed Washington of his intention to leave the cabinet once he submitted some “propositions” to Congress. Hamilton wanted to stay on until he had removed all suspicions about his conduct as treasury secretary. He was doing just what Jefferson was at that moment. Jefferson feared that to step down in the summer of 1793 would leave the impression that he had been driven from office by Hamilton, who was whaling away at him in essays about Genêt and neutrality. Similarly, Hamilton worried that to retire in mid-1793 would cause some to suspect that he had fled office before Congressman Giles, with more “time for due examination,” could resume his inquiry into the treasury secretary’s possible misconduct. Taking the rarest of rare steps in American political history, Hamilton asked Congress to reopen Giles’s investigation, adding that “the more comprehensive it is, the more agreeable it will be to me.”
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There must have been many times when Hamilton regretted the step he had taken. Congress opened its weeks-long hearings in March 1794. Hamilton was compelled to make one report after another to prove that he had never acted improperly, especially in stock speculation and the use of monies designated for settling the domestic debt. Hard-pressed, Hamilton on one occasion appealed to Washington to certify that he had acted with the president’s approval. Washington’s response disappointed him. Instead of a ringing defense, the president merely said that he had authorized what Hamilton had proposed to do, so long as he acted legally. Hurt by the president’s tepid answer, Hamilton once again beseeched Washington’s help in his battle against the “false and insidious” congressmen, begging the president to do more to show that his treasury secretary was “a man of honor.” Nothing more came from Washington, who was more accustomed to being shielded than to risking his reputation in the defense of others. Washington’s ambivalence, notwithstanding, Hamilton was fully vindicated by Congress.
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It is somewhat surprising that Hamilton did not quit once he was exonerated. Given his consuming emphasis on personal honor and the many times he had come to Washington’s defense, Hamilton must have been furious with the president’s less-than-resilient backing. Yet, Hamilton stayed on, serving for nearly another year. By the time the congressional inquiry ended, the Washington administration was enmeshed in its most crisis-laden
twelve-month period, a time of both peril and opportunity for Hamiltonianism. What is more, with Jefferson gone—and succeeded by Edmund Randolph, a relative lightweight—Hamilton was able to dominate the cabinet as never before.

While Hamilton coped with the congressional investigation, he was embroiled in the battle over imposing discriminatory rates on British imports, the step that Jefferson had urged in his final act as secretary of state. Madison had followed Jefferson’s report by reintroducing his 1789 resolution to discriminate through tariffs and restrictions against nations that had not signed a commercial treaty with the United States. British commercial hegemony was making America dangerously dependent on London, Madison declared, adding that in time “our taste, our manners, and our form of Government itself” would be shaped by British influences. Madison faced determined opposition and resistance by Federalist representatives. Fisher Ames of Massachusetts and William Loughton Smith of South Carolina led the fight against reciprocity, though Jefferson, at Monticello, had only to read Smith’s fifteen-thousand-word speech assailing the measure to know in an instant that Hamilton was “its true father.” (The content was so “ingenious,” Jefferson said, that Smith’s extemporaneous reply to Madison on the House floor demonstrated that he had not comprehended what Hamilton had prepared for him.)
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Through Smith, Hamilton couched his argument against discrimination largely in terms of American national security. The thrust of his reasoning was that discrimination would provoke retaliation, ending British investment in America, the fuel driving the new nation’s economic growth. Leaving nothing to happenstance, Hamilton appealed to a wider audience through two newspaper essays. As always, his arguments were canny, not to say misleading. (Jefferson applied the term “sophistry” to them.) Contending that the purpose of discrimination was to weaken the British war effort against France, Hamilton engaged in a philippic against the “atrocious depravity” of the French Revolution, which should preclude “material service to the cause of France.” Hamilton’s rhetorical brilliance was not solely responsible for winning the battle, but in the final days of winter, America’s farmers and city workers—envisaging uncultivated fields and barren harbors—lost their taste for discrimination. Sensing that victory was slipping away, Madison played for time. He postponed a vote in the House, telling Jefferson that their best hope was that London take some provocative step that “would strengthen the arguments for retaliation.”
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London obliged. The British fleet in the Caribbean immediately enforced the Orders in Council, which kicked in at the outset of the year. By March, newspapers bulged with listings of American merchant ships and cargoes
that had been seized. In no time, 250 American vessels had fallen victim to the British navy. Numerous American seamen had also been taken captive and impressed into the British navy. War fever swept the country. Madison wished to avoid war in 1794 as much as Jefferson had a year earlier during the neutrality crisis, but reciprocity aside, the House leader seemed not to know what to do. He sorely missed Jefferson, who was more adroit both at recognizing the broad contours of an issue and at sensing the vulnerabilities of an adversary.

Hamilton and the Federalists filled the vacuum, seizing the initiative with greater success than at any time since the bank fight more than three years before. Fearing that London’s policy would nourish Anglophobia, which could result in the destruction of his financial system, Hamilton thought it essential that the Federalists control America’s response to Britain’s provocations. But there was more. From the beginning, he had sought the creation of a fiscal-military state, and over the years, his party had pushed with success to increase the size of the American army. In the five years since Washington’s first inauguration, America’s army had grown from five hundred to five thousand men. Hamilton now asserted that a “respectable military posture” required the expansion of the army by an additional twenty thousand men. Madison knew that augmenting the army was “absurd,” as there was no prospect of a British invasion. He divined that the Federalists were employing an “old trick,” one that he knew well from his days as a Nationalist. The Federalists were magnifying the sense of crisis in order to turn “every contingency into a resource for accumulating force in the Government,” much as they had done with Shays’ Rebellion and other purported emergencies. Jefferson saw things in the same light: “Not that the Monocrats and Papermen … want war; but they want armies and debts,” he said.
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Given what he called America’s “antient hatred of Gr. Britain,” Jefferson thought war was possible unless the crisis was quickly resolved. Neither he nor Madison wanted war and both continued to believe that only trade discrimination would compel London to back down. As such a policy was never tried, it cannot be known whether it would have been effective, but as trade with America was merely one-sixth of Britain’s total commerce, the odds against its success were considerable. In the end, it was the Federalists who had Washington’s ear, and they coalesced around seeking a negotiated settlement. While Federalist spokesmen took a hard line, party leaders met with Washington and beseeched him to send an envoy to London. There were dangers in that course. As America would have little leverage, the settlement might be undesirable, or if negotiations broke down, nothing might be left but commercial discrimination or war. But negotiations also offered hope. Talks could result in the termination of the Royal Navy’s ruinous practices,
and they might finally settle the differences left unresolved since the war. Hamilton told Washington that time was of the essence. If the Republicans were permitted to “excite and keep alive irritation and ill humour” toward Great Britain until they achieved reciprocity, an accommodation with London would be out of the question. To follow Jefferson’s course, he added, would be to back Britain into a corner, leaving it to choose between war or “disgrace or disrepute,” and London would never acquiesce in the latter.
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Washington must have known Hamilton well enough to know when he embroidered. Nevertheless, the president preferred an honorable peace. He was willing to give diplomacy a chance. Initially, Washington leaned toward dispatching Hamilton, who was backed by every major Federalist. But the Republicans howled. One Virginian told the president straightaway that “more than half America” would think it “unsafe to trust power in the hands of this person,” and James Monroe warned Washington that because of Hamilton’s well-known Anglophilia, his appointment would not only provoke the “strongest … dissatisfaction” in France but also taint any treaty that he negotiated. Privately, Jefferson allowed that Hamilton’s selection would be “degrading.” He thought the only reason that Washington was considering Hamilton was to remove him from the country, saving him from the “disgrace and … public execrations” that would ensue when his economic system collapsed, as surely it would.
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Aware of the firestorm, and possibly of the damage his long-term ambitions would suffer should the mission to London end in failure, Hamilton removed himself from consideration. He cited the “collateral obstacles” that his appointment would entail. Washington quickly named John Jay instead. The selection outraged most Republicans, who dismissed Jay as a clone of Hamilton. One Democratic-Republican chapter in western Pennsylvania questioned whether Washington realized there were competent men available besides New York Anglophiles. It added that the president had so sequestered himself from the public that he had become akin to the “grand sultan of Constantinople.” Madison correctly told Jefferson that this was “the most powerful blow ever suffered by the popularity of the President,” as he had never before been so savagely attacked.
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The fury provoked by Jay’s appointment was not the only cause of western resentment toward the Washington administration. Hatred of Great Britain was intense among frontier settlers who vividly remembered the Revolutionary War and were all too aware that the British government continued to occupy its western posts and arm the Indians in the Ohio Country. Large numbers of these frontiersmen were tenant farmers who lived hardscrabble lives, and they reasoned that if the British had been made to quit their posts,
the fertile lands in trans-Appalachia would have been safe for settlement. But after five years of Washington’s presidency, the British and their Indian allies were still there. Moreover, if Spain had been compelled to open the Mississippi River to American commerce, the frontiersmen would by now have transitioned from dirt farmers to commercial farmers, as they could be exporting their goods downriver to the West Indies, Europe, and America’s East Coast cities. They knew that Genêt had offered a plan for opening the Mississippi, but Washington had sent him packing and the great river remained closed. Now, Washington’s envoy extraordinary to London was John Jay, who a decade earlier had been willing to surrender his country’s claims to the Mississippi River. Given their plight, the one thing that might have provided these farmers with a discretionary income had been the sale of the whiskey they distilled, but Washington’s administration had levied the so-called whiskey tax on them. The feeling was rife among these surly westerners that Washington’s government was dominated by elite northeastern speculators who were indifferent to the predicament facing those who lived on the frontier.
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In reality, no one wanted to resolve the problems that faced the western settlers more than Washington, and he tried to do so with the limited resources at his disposal. From the outset of his administration, the president had set both Hamilton and Jefferson to discussing with London’s envoys the end of British occupation of the western post. Those talks were unavailing. What is more, the president had sent two armies beyond the mountains to pacify the Indians, but both had suffered mortifying defeats. A third army was gathering in 1794, to be led by Anthony Wayne, a former Continental army general.

But if Washington had diligently sought to resolve those deep-seated problems, the policies of his administration contributed to the western difficulties that he faced in 1794. That year’s crisis was sparked by the excise on distilled liquor. To pay for the assumption of state debts, Hamilton had advocated, and obtained, the whiskey tax three years earlier. The levy imposed a heavy burden on western farmers. Staggering overhead costs prevented them from transporting their corn across the mountains to eastern markets, but a couple of mules could carry several kegs of their corn whiskey to those same markets, where its sale to thirsty city dwellers would net a nifty profit. Those profits, however, would largely be wiped out by the whiskey tax. In addition, the farmers saw the legislation as unfair on several counts. For one thing, large distillers—all in the East—paid less than small farmers, for they were assessed a per-gallon tax while farmer-distillers paid according the gallon capacity of their still. For another, the small western farmers who paid the
excise on spirits knew that the ultimate beneficiaries of the duties imposed on them would be wealthy easterners who owned the federal securities sold to pay for funding and assumption. Nothing about the whiskey tax was accidental. Within the interstices of Hamilton’s plan was a scheme not merely for transferring wealth from the least affluent to the most prosperous but also for the transference of economic and political power from the west, which had been solidly anti-Federalist, to northern and eastern cities, the Federalist base.
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