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AN ECONOMIC INTERPRETATION OF THE CONSTITUTION OF THE UNITED STATES

THE MACMILLAN COMPANY

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AN ECONOMIC INTERPRETATION OF THE CONSTITUTION OF THE UNITED STATES

BY

CHARLES A. BEARD

ASSOCIATE PROFESSOR OF POLITICS IN COLUMBIA UNIVERSITY

New York

THE MACMILLAN COMPANY

1914

All rights reserved

Copyright, 1913,

By THE MACMILLAN COMPANY.

Set up and electrotyped. Published April, 1913. Reprinted July, 1914.

Norwood Press

J. S. Cushing Co.—Berwick & Smith Co.

Norwood, Mass., U.S.A.

PREFACE

The following pages are frankly fragmentary. They are designed to suggest new lines of historical research rather than to treat the subject in an exhaustive fashion. This apology is not intended as an anticipation of the criticism of reviewers, but as a confession of fact. No one can appreciate more fully than I do how much of the work here outlined remains to be done. The records of the Treasury Department at Washington, now used for the first time in connection with a study of the formation of the Constitution, furnish a field for many years’ research, to say nothing of the other records, printed and unprinted, which throw light upon the economic conditions of the United States between 1783–1787.

If it be asked why such a fragmentary study is printed now, rather than held for the final word, my explanation is brief. I am unable to give more than an occasional period to uninterrupted studies, and I cannot expect, therefore, to complete within a reasonable time the survey which I have made here. Accordingly, I print it in the hope that a few of this generation of historical scholars may be encouraged to turn away from barren “political” history to a study of the real economic forces which condition great movements in politics.

Students already familiar with the field here surveyed will discover that I have made full use of the suggestive work already done by Professor Turner, Drs. Libby, Ambler, and Schaper.

I am indebted to Mr. Merwin of the Treasury Department for his great courtesy in making available the old records under his jurisdiction; to Mr. Bishop, of the Library of Congress, for facilitating the examination of thousands of pamphlets as well as for other favors; and to Mr. Fitzpatrick, of the Manuscript Division, for keeping his good humor while bringing out hundreds of manuscripts which seemed to yield results wholly out of proportion to the labor entailed.

I am under deep obligation to two friends, nameless here, without whose generous sympathy and encouragement, this volume could not have been written.

CHARLES A. BEARD.

Washington, D.C.,

February, 1913.

CONTENTS

AN ECONOMIC INTERPRETATION OF THE CONSTITUTION OF THE UNITED STATES

CHAPTER I
HISTORICAL INTERPRETATION IN THE UNITED STATES

Broadly speaking, three schools of interpretation have dominated American historical research and generalization. The first of these, which may be justly associated with the name of Bancroft, explains the larger achievements in our national life by reference to the peculiar moral endowments of a people acting under divine guidance; or perhaps it would be more correct to say, it sees in the course of our development the working out of a higher will than that of man. There is to be observed in the history of the struggle for the Constitution, to use Bancroft’s words, “the movement of the divine power which gives unity to the universe, and order and connection to events.”[^[1]]

Notwithstanding such statements, scattered through Bancroft’s pages, it is impossible to describe in a single phrase the ideal that controlled his principles of historical construction, because he was so often swayed by his deference to the susceptibilities of the social class from which he sprang and by the exigencies of the public life in which he played a by no means inconspicuous part. Even telling the whole truth did not lie upon his conscience, for, speaking on the question of the number of Americans who were descendants from transported felons and indented servants, he said that “Having a hand full, he opened his little finger.”[^[2]]

Nevertheless, Bancroft constantly recurs in his writings to that “higher power” which is operating in human affairs, although he avoids citing specific events which may be attributed to it. It appears to him to be the whole course of history, rather than any event or set of events, which justifies his theory. “However great,” he says, “may be the number of those who persuade themselves that there is in man nothing superior to himself, history interposes with evidence that tyranny and wrong lead inevitably to decay; that freedom and right, however hard may be the struggle, always prove resistless. Through this assurance ancient nations learn to renew their youth; the rising generation is incited to take a generous part in the grand drama of time; and old age, staying itself upon sweet Hope as its companion and cherisher, not bating a jot of courage, nor seeing cause to argue against the hand or the will of a higher power, stands waiting in the tranquil conviction that the path of humanity is still fresh with the dews of morning, that the Redeemer of the nations liveth.”[^[3]]

The second school of historical interpretation, which in the order of time followed that of Bancroft, may be called the Teutonic, because it ascribes the wonderful achievements of the English-speaking peoples to the peculiar political genius of the Germanic race. Without distinctly repudiating the doctrine of the “higher power” in history, it finds the secret to the “free” institutional development of the Anglo-Saxon world in innate racial qualities.

The thesis of this school is, in brief, as follows. The Teutonic peoples were originally endowed with singular political talents and aptitudes; Teutonic tribes invaded England and destroyed the last vestiges of the older Roman and British culture; they then set an example to the world in the development of “free” government. Descendants of this specially gifted race settled America and fashioned their institutions after old English models. The full fruition of their political genius was reached in the creation of the Federal Constitution.

For more than a generation the Teutonic theory of our institutions deeply influenced historical research in the United States; but it was exhausted in the study of local government rather than of great epochs; and it produced no monument of erudition comparable to Stubbs’ Constitutional History of England. Whatever may be said of this school, which has its historical explanation and justification,[^[4]] it served one exceedingly useful purpose: it was scrupulously careful in the documentation of its preconceptions and thus cultivated a more critical spirit than that which characterized the older historians.[^[5]]

The third school of historical research is not to be characterized by any phrase. It is marked rather by an absence of hypotheses. Its representatives, seeing the many pitfalls which beset the way of earlier writers, have resolutely turned aside from “interpretation” in the larger sense, and concerned themselves with critical editions of the documents and with the “impartial” presentation of related facts. This tendency in American scholarship has been fruitful in its results, for it has produced more care in the use of historical sources and has given us many excellent and accurate surveys of outward events which are indispensable to the student who would inquire more deeply into underlying causes.[^[6]]

Such historical writing, however, bears somewhat the same relation to scientific history which systematic botany bears to ecology; that is, it classifies and orders phenomena, but does not explain their proximate or remote causes and relations. The predominance of such a historical ideal in the United States and elsewhere is not altogether inexplicable; for interpretative schools seem always to originate in social antagonisms.[^[7]] The monarchy, in its rise and development, was never correctly understood as long as it was regarded by all as a mystery which must not be waded into, as James I put it, by ordinary mortals. Without the old régime there would have been no Turgot and Voltaire; Metternich and Joseph de Maistre came after the Revolution.

But the origin of different schools of interpretation in controversies and the prevalence of many mere preconceptions bolstered with a show of learning should not lead us to reject without examination any new hypothesis, such as the theory of economic determinism, on the general assumption of Pascal “that the will, the imagination, the disorders of the body, the thousand concealed infirmities of the intelligence conspire to reduce our discovery of justice and truth to a process of haphazard, in which we more often miss than hit the mark.” Such a doctrine of pessimism would make of equal value for the student who would understand, for instance, such an important matter as the origin of the state, Mr. Edward Jenk’s severely scientific History of Politics and Dr. Nathaniel Johnston’s The Excellency of Monarchical Government, especially the English Monarchy, wherein is largely treated of the Several Benefits of Kingly Government and the Inconvenience of Commonwealths.... Likewise the Duty of Subjects and the Mischief of Faction, Sedition, and Rebellion, published in 1686.

It is not without significance, however, that almost the only work in economic interpretation which has been done in the United States seems to have been inspired at the University of Wisconsin by Professor Turner, now of Harvard. Under the direction of this original scholar and thinker, the influence of the material circumstances of the frontier on American politics was first clearly pointed out. Under his direction also the most important single contribution to the interpretation of the movement for the federal Constitution was made: O. G. Libby’s Geographical Distribution of the Vote of the Thirteen States on the Federal Constitution.

In a preface to this work, Professor Turner remarks that the study was designed to contribute “to an understanding of the relations between the political history of the United States, and the physiographic, social, and economic conditions underlying this history.... It is believed that many phases of our political history have been obscured by the attention paid to state boundaries and to the sectional lines of North and South. At the same time the economic interpretation of our history has been neglected. In the study of the persistence of the struggle for state particularism in American constitutional history, it was inevitable that writers should make prominent the state as a political factor. But, from the point of view of the rise and growth of sectionalism and nationalism, it is much more important to note the existence of great social and economic areas, independent of state lines, which have acted as units in political history, and which have changed their political attitude as they changed their economic organization and divided into new groups.”[^[8]]

Although the hypothesis that economic elements are the chief factors in the development of political institutions has thus been used in one or two serious works, and has been more or less discussed as a philosophic theory,[^[9]] it has not been applied to the study of American history at large—certainly not with that infinite detailed analysis which it requires. Nor has it received at the hands of professed historians that attention which its significance warrants. On the contrary, there has been a tendency to treat it with scant courtesy and to dismiss it with a sharpness bordering on contempt.[^[10]] Such summary judgment is, of course, wholly unwarranted and premature; for as Dr. William Cunningham remarks, the validity of no hypothesis can be determined until it has been worked to its utmost limits. It is easier to write a bulky volume from statutes, congressional debates,[^[11]] memoirs, and diplomatic notes than it is to ascertain the geographical distribution and political significance of any important group of economic factors. The theory of economic determinism has not been tried out in American history, and until it is tried out, it cannot be found wanting.

Sadly as the economic factors have been ignored in historical studies, the neglect has been all the more pronounced in the field of private and public law. The reason for this is apparent. The aim of instruction in these subjects is intensely practical; there are few research professorships in law; and the “case” system of teaching discourages attempts at generalization and surveys.[^[12]] Not even the elementary work has been done. There has been no generous effort to describe the merely superficial aspects of the development of private law in the United States. There has been no concerted attempt to bring together and make available to students the raw materials of such a history. Most of the current views on the history of our law are derived from occasional disquisitions of judges which are all too frequently shot through with curious errors of fact and conception.

Nor has England advanced far beyond us in the critical interpretation of legal evolution—its explanation in terms of, or in relation to, the shifting economic processes and methods in which the law is tangled. It is true that English scholars have produced admirable histories of the law in its outward aspects, such as the monumental work of Pollock and Maitland; and they have made marvellous collections of raw materials, like the publications of the Selden Society. But apart from scattered and brilliant suggestions thrown off occasionally by Maitland[^[13]] in passing, no interpretation has been ventured, and no effort has been made to connect legal phases with economic changes.

In the absence of a critical analysis of legal evolution, all sorts of vague abstractions dominate most of the thinking that is done in the field of law. The characteristic view of the subject taken by American commentators and lawyers immersed in practical affairs is perhaps summed up as finely by Carter as by any writer. “In free, popular states,” he says, “the law springs from and is made by the people; and as the process of building it up consists in applying, from time to time, to human actions the popular ideal or standard of justice, justice is only interest consulted in the work.... The law of England and America has been a pure development proceeding from a constant endeavor to apply to the civil conduct of men the ever advancing standard of justice.”[^[14]] In other words, law is made out of some abstract stuff known as “justice.” What set the standard in the beginning and why does it advance?

The devotion to deductions from “principles” exemplified in particular cases, which is such a distinguishing sign of American legal thinking, has the same effect upon correct analysis which the adherence to abstract terms had upon the advancement of learning—as pointed out by Bacon. The absence of any consideration of the social and economic elements determining the thought of the thinkers themselves is all the more marked when contrasted with the penetration shown by European savants like Jhering, Menger, and Stammler. Indeed, almost the only indication of a possible economic interpretation to be found in current American jurisprudence is implicit in the writings of a few scholars, like Professor Roscoe Pound and Professor Goodnow,[^[15]] and in occasional opinions rendered by Mr. Justice Holmes of the Supreme Court of the United States.[^[16]]

What has here been said about our private law may be more than repeated about our constitutional history and law. This subject, though it has long held an honorable position in the American scheme of learning, has not yet received the analytical study which its intrinsic importance merits. In the past, it has often been taught in the law schools by retired judges who treated it as a branch of natural and moral philosophy or by practical lawyers who took care for the instant need of things. Our great commentaries, Kent, Story, Miller, are never penetrating; they are generally confined to statements of fact; and designed to inculcate the spirit of reverence rather than of understanding. And of constitutional histories, strictly speaking, we have none, except the surveys of superficial aspects by Curtis and Bancroft.

In fact, the juristic theory of the origin and nature of the Constitution is marked by the same lack of analysis of determining forces which characterized older historical writing in general. It may be stated in the following manner: The Constitution proceeds from the whole people; the people are the original source of all political authority exercised under it; it is founded on broad general principles of liberty and government entertained, for some reason, by the whole people and having no reference to the interest or advantage of any particular group or class. “By calm meditation and friendly councils,” says Bancroft, “they [the people] had prepared a Constitution which, in the union of freedom with strength and order, excelled every one known before.... In the happy morning of their existence as one of the powers of the world, they had chosen justice for their guide; and while they proceeded on their way with a well-founded confidence and joy, all the friends of mankind invoked success on their endeavor as the only hope for renovating the life of the civilized world.”[^[17]]

With less exaltation, Chief Justice Marshall states the theory, in his opinion in the case of McCulloch v. Maryland: “The government proceeds directly from the people; is ‘ordained and established’ in the name of the people; and is declared to be ordained ‘in order to form a more perfect union, to establish justice, insure domestic tranquillity, and secure the blessings of liberty’ to themselves and to their posterity. The assent of the states, in their sovereign capacity, is implied in calling a convention, and thus submitting that instrument to the people. But the people were at perfect liberty to accept or reject it; and their act was final.... The government of the Union, then (whatever may be the influence of this fact on the case) is emphatically and truly a government of the people. In form and in substance it emanates from them. Its powers are granted by them, and are to be exercised directly on them, and for their benefit.... It is the government of all; its powers are delegated by all; it represents all, and acts for all.”[^[18]]

In the juristic view, the Constitution is not only the work of the whole people, but it also bears in it no traces of the party conflict from which it emerged. Take, for example, any of the traditional legal definitions of the Constitution; Miller’s will suffice: “A constitution, in the American sense of the word, is any instrument by which the fundamental powers of the government are established, limited, and defined, and by which these powers are distributed among the several departments for their more safe and useful exercise, for the benefit of the body politic.... It is not, however, the origin of private rights, nor the foundation of laws. It is not the cause, but the consequence of personal and political freedom. It declares those natural and fundamental rights of individuals, for the security and common enjoyment of which governments are established.”[^[19]]

Nowhere in the commentaries is there any evidence of the fact that the rules of our fundamental law are designed to protect any class in its rights, or secure the property of one group against the assaults of another. “The Constitution,” declares Bancroft, “establishes nothing that interferes with equality and individuality. It knows nothing of differences by descent, or opinions, of favored classes, or legalized religion, or the political power of property. It leaves the individual along-side of the individual.... As the sea is made up of drops, American society is composed of separate, free, and constantly moving atoms, ever in reciprocal action ... so that the institutions and laws of the country rise out of the masses of individual thought, which, like the waters of the ocean, are rolling evermore.”[^[20]]

In turning from the vague phraseology of Bancroft to an economic interpretation of constitutional history, it is necessary to realize at the outset that law is not an abstract thing, a printed page, a volume of statutes, a statement by a judge. So far as it becomes of any consequence to the observer it must take on a real form; it must govern actions; it must determine positive relations between men; it must prescribe processes and juxtapositions.[^[21]] A statute may be on the books for an age, but unless, under its provisions, a determinate arrangement of human relations is brought about or maintained, it exists only in the imagination. Separated from the social and economic fabric by which it is, in part, conditioned and which, in turn, it helps to condition, it has no reality.

Now, most of the law (except the elemental law of community defence) is concerned with the property relations of men, which reduced to their simple terms mean the processes by which the ownership of concrete forms of property is determined or passes from one person to another. As society becomes more settled and industrial in character, mere defence against violence (a very considerable portion of which originates in forcible attempts to change the ownership of property) becomes of relatively less importance; and property relations increase in complexity and subtlety.

But it may be said that constitutional law is a peculiar branch of the law; that it is not concerned primarily with property or with property relations, but with organs of government, the suffrage, administration. The superficiality of this view becomes apparent at a second glance. Inasmuch as the primary object of a government, beyond the mere repression of physical violence, is the making of the rules which determine the property relations of members of society, the dominant classes whose rights are thus to be determined must perforce obtain from the government such rules as are consonant with the larger interests necessary to the continuance of their economic processes, or they must themselves control the organs of government. In a stable despotism the former takes place; under any other system of government, where political power is shared by any portion of the population, the methods and nature of this control become the problem of prime importance—in fact, the fundamental problem in constitutional law. The social structure by which one type of legislation is secured and another prevented—that is, the constitution—is a secondary or derivative feature arising from the nature of the economic groups seeking positive action and negative restraint.

In what has just been said there is nothing new to scholars who have given any attention to European writings on jurisprudence. It is based in the first instance on the doctrine advanced by Jhering that law does not “grow,” but is, in fact, “made”—adapted to precise interests which may be objectively determined.[^[22]] It was not original with Jhering. Long before he worked out the concept in his epoch-making book, Der Zweck im Recht, Lassalle had set it forth in his elaborate Das System der erworbenen Rechte,[^[23]] and long before Lassalle had thought it through, our own Madison had formulated it, after the most wide-reaching researches in history and politics.[^[24]]

In fact, the inquiry which follows is based upon the political science of James Madison, the father of the Constitution and later President of the Union he had done so much to create. This political science runs through all of his really serious writings and is formulated in its most precise fashion in The Federalist[^[25]] as follows: “The diversity in the faculties of men, from which the rights of property originate, is not less an insuperable obstacle to a uniformity of interests. The protection of these faculties is the first object of government. From the protection of different and unequal faculties of acquiring property, the possession of different degrees and kinds of property immediately results; and from the influence of these on the sentiments and views of the respective proprietors, ensues a division of society into different interests and parties.... The most common and durable source of factions has been the various and unequal distribution of property. Those who hold and those who are without property have ever formed distinct interests in society. Those who are creditors, and those who are debtors, fall under a like discrimination. A landed interest, a manufacturing interest, a mercantile interest, a moneyed interest, with many lesser interests, grow up of necessity in civilized nations and divide them into different classes, actuated by different sentiments and views. The regulation of these various and interfering interests forms the principal task of modern legislation, and involves the spirit of party and faction in the necessary and ordinary operations of the government.”

Here we have a masterly statement of the theory of economic determinism in politics.[^[26]] Different degrees and kinds of property inevitably exist in modern society; party doctrines and “principles” originate in the sentiments and views which the possession of various kinds of property creates in the minds of the possessors; class and group divisions based on property lie at the basis of modern government; and politics and constitutional law are inevitably a reflex of these contending interests. Those who are inclined to repudiate the hypothesis of economic determinism as a European importation must, therefore, revise their views, on learning that one of the earliest, and certainly one of the clearest, statements of it came from a profound student of politics who sat in the Convention that framed our fundamental law.

The requirements for an economic interpretation of the formation and adoption of the Constitution may be stated in a hypothetical proposition which, although it cannot be verified absolutely from ascertainable data, will at once illustrate the problem and furnish a guide to research and generalization.

It will be admitted without controversy that the Constitution was the creation of a certain number of men, and it was opposed by a certain number of men. Now, if it were possible to have an economic biography of all those connected with its framing and adoption,—perhaps about 160,000 men altogether,—the materials for scientific analysis and classification would be available. Such an economic biography would include a list of the real and personal property owned by all of these men and their families: lands and houses, with incumbrances, money at interest, slaves, capital invested in shipping and manufacturing, and in state and continental securities.

Suppose it could be shown from the classification of the men who supported and opposed the Constitution that there was no line of property division at all; that is, that men owning substantially the same amounts of the same kinds of property were equally divided on the matter of adoption or rejection—it would then become apparent that the Constitution had no ascertainable relation to economic groups or classes, but was the product of some abstract causes remote from the chief business of life—gaining a livelihood.

Suppose, on the other hand, that substantially all of the merchants, money lenders, security holders, manufacturers, shippers, capitalists, and financiers and their professional associates are to be found on one side in support of the Constitution and that substantially all or the major portion of the opposition came from the non-slaveholding farmers and the debtors—would it not be pretty conclusively demonstrated that our fundamental law was not the product of an abstraction known as “the whole people,” but of a group of economic interests which must have expected beneficial results from its adoption? Obviously all the facts here desired cannot be discovered, but the data presented in the following chapters bear out the latter hypothesis, and thus a reasonable presumption in favor of the theory is created.

Of course, it may be shown (and perhaps can be shown) that the farmers and debtors who opposed the Constitution were, in fact, benefited by the general improvement which resulted from its adoption. It may likewise be shown, to take an extreme case, that the English nation derived immense advantages from the Norman Conquest and the orderly administrative processes which were introduced, as it undoubtedly did; nevertheless, it does not follow that the vague thing known as “the advancement of general welfare” or some abstraction known as “justice” was the immediate, guiding purpose of the leaders in either of these great historic changes. The point is, that the direct, impelling motive in both cases was the economic advantages which the beneficiaries expected would accrue to themselves first, from their action. Further than this, economic interpretation cannot go. It may be that some larger world-process is working through each series of historical events; but ultimate causes lie beyond our horizon.

CHAPTER II
A SURVEY OF ECONOMIC INTERESTS IN 1787

The whole theory of the economic interpretation of history rests upon the concept that social progress in general is the result of contending interests in society—some favorable, others opposed, to change. On this hypothesis, we are required to discover at the very outset of the present study what classes and social groups existed in the United States just previous to the adoption of the Constitution and which of them, from the nature of their property, might have expected to benefit immediately and definitely by the overthrow of the old system and the establishment of the new. On the other hand, it must be discovered which of them might have expected more beneficial immediate results, on the whole, from the maintenance of the existing legal arrangements.

The importance of a survey of the distribution of property in 1787 for economic as well as political history is so evident that it is strange that no attempt has been made to undertake it on a large scale. Not even a beginning has been made. It is, therefore, necessary for us to rely for the present upon the general statements of historians who have written more or less at length about the period under consideration; but in the meanwhile it can do no harm to suggest, by way of a preface, the outlines of such a survey and some of the chief sources of information.

I. In the first place, there were the broad interests of real property which constituted, in 1787, a far larger proportion of all wealth than it does at the present time. The size, value, and ownership of holdings and their geographical distribution ought to be ascertained. In the absence of a general census, the preparation of such an economic survey would entail an enormous labor, and it could never be more than approximately complete. Neither the census of 1790 nor the assessment for direct taxes under the law of 1798 covers this topic. The assessment rolls of the several states for taxation, wherever available, would yield the data desired, at least in part; but a multitude of local records would have to be consulted with great scrutiny and critical care.

II. In order to ascertain the precise force of personalty in the formation and adoption of the Constitution, it would be necessary to discover not only the amount and geographical distribution[^[27]] of money and public securities; but also the exact fields of operation in which personalty looked for immediate and prospective gains. A complete analysis of the economic forces in the Constitution-making process would require the following data:—

1. The geographic distribution of money on hand and loaned and the names of the holders. It is apparent that much of the material from which evidence on these points may be obtained has disappeared; but an intensive study of the tax returns of the states, the records of the local assessors, wills probated, mortgages recorded, and suits in courts over loans and mortgages, would no doubt produce an immense amount of illuminating information.

2. The geographic distribution and ownership of the public securities. Fortunately the unpublished and unworked records of the Treasury Department at Washington throw great light on this fundamental problem. Shortly after the federal government was established the old debt was converted into a new consolidated, or funded, debt; and holders of public securities, state and continental, brought their papers to their local loan office (one for each state) or to the Treasury to have them recorded and transformed into the stocks of the new government.

The records of this huge transaction (which was the first really great achievement of nascent capitalism in the United States), if they had been kept intact, would constitute, perhaps, the most wonderful single collection on economic history ever possessed by any country. Were they complete, they would form a veritable Domesday Book of the politics during the first years of the new government. But unfortunately they are not complete. The records of Hamilton’s administration at the Treasury itself seem to have largely disappeared, and the records of the loan offices in the several states are generally fragmentary, although in one or two instances they are indeed monumental.

A complete set of these financial documents should show: (1) the owners of certificates of the old government as issued, during the Revolution and afterward, to original holders; (2) the transfers of certificates from original holders to other parties; (3) the names of those who held certificates in 1787, when the Convention was called to frame the Constitution; (4) the records of transactions in stocks between the announcement of the Convention’s work and the adoption of Hamilton’s funding system; (5) the names of those who brought in securities for funding into the new debt; (6) the names of those for whom the brokers, whose names appear on the loan office books, were, in fact, operating.

None of the records preserved at the Treasury Department presents all of the evidence required for the scientific study of a single state. Nearly one-third of the operations were at the Treasury and of these only a meagre fragment seems to have escaped the ravages of time. In the documents of some of the commonwealths, however, it is possible to ascertain the names of hundreds of patriots who risked their money in original certificates or received certificates for services rendered. The books of a few loan offices are so kept that it can be easily discovered who brought in securities to be funded into the new debt and also to whom these securities were originally issued.

In some states the ledgers were carefully preserved and it is possible to find out the names and addresses of the holders of securities funded at the local loan office and the amount held by each person. The ledgers of Connecticut, for example, offer a rich field for the study of the names and geographical distribution of public creditors, and the tracing of these interests through their myriad local ramifications would afford an interesting and profitable undertaking. But unfortunately multitudes of the most significant operations are forever lost; it is to be particularly deplored that the “powers of attorney” for the period are not forthcoming. Unless the Government at Washington follows the example of enlightened administrations in Europe and establishes a Hall of Records, the precious volumes which have come down to us will be worked only with great difficulty, if they do not disintegrate and disappear altogether.[^[28]]

3. The geographic distribution of small mortgaged farms and their connection with various schemes for depreciation of the currency and impairment of the obligation of contract. No doubt work in local records would yield valuable results in this field.

4. Owners and operators in western lands. Speculation in western lands was one of the leading activities of capitalists in those days. As is well known, the soldiers were paid in part in land scrip and this scrip was bought up at low prices by dealers, often with political connections. Furthermore, large areas had been bought outright for a few cents an acre and were being held for a rise in value. The chief obstacle in the way of the rapid appreciation of these lands was the weakness of the national government which prevented the complete subjugation of the Indians, the destruction of old Indian claims, and the orderly settlement of the frontier. Every leading capitalist of the time thoroughly understood the relation of a new constitution to the rise in land values beyond the Alleghanies. This idea was expressed, for example, by Hugh Williamson, a member of the Convention from North Carolina and a land speculator in a letter to Madison.[^[29]] The materials for the study of land operations exist in enormous quantities, largely in manuscript form in Washington; and a critical scrutiny of the thousands of names that appear on these records, in their political relations, would afford results beyond all measure. Here, too, is the work for a lifetime.

5. The geographic distribution of manufacturing establishments and the names of owners and investors. On this important topic a mass of printed and manuscript materials exists, but no attempt has yet been made to catalogue the thousands of names of persons with a view to establishing political connections. To produce the materials for this study, searches must be made in the local records from New Hampshire to Georgia. Wills probated, transfers of property, law suits, private papers, advertisements in newspapers, shipping records, Hamilton’s correspondence in the Manuscript Division of the Library of Congress, unclassified Treasury Records and correspondence, and innumerable other sources must be searched and lists of names and operations made.

Pending the enormous and laborious researches here enumerated, the following pages are offered merely as an indication of the way in which the superficial aspects of the subject may be treated.[^[30]] In fact, they sketch the broad outlines of the study which must be filled in and corrected by detailed investigations.

THE DISFRANCHISED

In an examination of the structure of American society in 1787, we first encounter four groups whose economic status had a definite legal expression: the slaves, the indented servants, the mass of men who could not qualify for voting under the property tests imposed by the state constitutions and laws, and women, disfranchised and subjected to the discriminations of the common law. These groups were, therefore, not represented in the Convention which drafted the Constitution, except under the theory that representation has no relation to voting.

How extensive the disfranchisement really was cannot be determined.[^[31]] In some states, for instance, Pennsylvania and Georgia, propertyless mechanics in the towns could vote; but in other states the freehold qualifications certainly excluded a great number of the adult males.

In no state, apparently, had the working-class developed a consciousness of a separate interest or an organization that commanded the attention of the politicians of the time. In turning over the hundreds of pages of writings left by eighteenth-century thinkers one cannot help being impressed with the fact that the existence and special problems of a working-class, then already sufficiently numerous to form a considerable portion of society, were outside the realm of politics, except in so far as the future power of the proletariat was foreseen and feared.[^[32]]

When the question of the suffrage was before the Convention, Madison warned his colleagues against the coming industrial masses: “Viewing the subject in its merits alone, the freeholders of the Country would be the safest depositories of Republican liberty. In future times a great majority of the people will not only be without landed, but any other sort of property. These will either combine under the influence of their common situation; in which case,[^[33]] the rights of property and the public liberty will not be secure in their hands, or, which is more probable, they will become the tools of opulence and ambition; in which case there will be equal danger on another side.”[^[34]]

So far as social policy is concerned, however, the working-class problem had not made any impression on the statesmen of the time. Hamilton in his report on manufactures,[^[35]] dismisses the subject with scant notice. He observes that one of the advantages of the extensive introduction of machinery will be “the employment of persons who would otherwise be idle, and in many cases, a burthen on the community, either from bias of temper, habit, infirmity of body, or some other cause, indisposing or disqualifying them for the toils of the country. It is worthy of remark, that, in general, women and children are rendered more useful, and the latter more early useful, by manufacturing establishments, than they would otherwise be. Of the number of persons employed in the cotton manufactories of Great Britain, it is computed that four-sevenths, nearly, are women and children; of whom the greatest proportion are children, many of them of a tender age.” Apparently this advantage was, in Hamilton’s view, to accrue principally to the fathers of families, for he remarks: “The husbandman himself experiences a new source of profit and support, from the increased industry of his wife and daughters, invited and stimulated by the demands of the neighboring manufactories.”

Passing beyond these groups which were politically nonexistent, except in so far as those who possessed the ballot and economic power were compelled to safeguard their rights against assaults from such quarters, we come to the social groupings within the politically enfranchised mass. Here we find no legal class distinctions. Social distinctions were very sharp, it is true, as every student of manners and customs well knows; but there were no outward legal signs of special class privileges.

GROUPS OF REAL PROPERTY HOLDERS

Nevertheless, the possessors of property were susceptible of classification into several rather marked groups, though of course they shade off into one another by imperceptible gradations. Broadly speaking, there were the interests of real and personal property. Here, however, qualifications must be made. There was no such identity of interest between the large planters and the small inland farmers of the south as existed in England between the knights and yeomen. The real property holders may be classified into three general groups: the small farmers, particularly back from the sea-coast, scattered from New Hampshire to Georgia, the manorial lords, such as we find along the banks of the Hudson,[^[36]] and the slaveholding planters of the south.

1. The first of these groups, the small farmers, constituted a remarkably homogeneous class. The inland section was founded and recruited by mechanics, the poorer whites, and European (particularly Scotch-Irish) immigrants. It had peculiar social and political views arising from the crude nature of its environment, but its active political doctrines were derived from an antagonism to the seaboard groups. One source of conflict was connected with the possession of the land itself. Much of the western country had been taken up by speculators and the settlers were either squatters or purchasers from large holders. This is illustrated by the situation in Virginia, where, as Ambler points out, “liberality in granting her unoccupied lands did not prove to be good policy. True, large numbers of settlers were early attracted to the state, where they made permanent homes, but much of the land fell into the hands of speculators. Companies were formed in Europe and America to deal in Virginia lands, which were bought up in large tracts at the trifling cost of two cents per acre. This wholesale engrossment soon consumed practically all the most desirable lands and forced the home seeker to purchase from speculators or to settle as a squatter.”[^[37]] As the settler sought to escape from the speculator by moving westward, the frontier line of speculation advanced.

In addition to being frequently in debt for their lands, the small farmers were dependent upon the towns for most of the capital to develop their resources. They were, in other words, a large debtor class, to which must be added, of course, the urban dwellers who were in a like unfortunate condition.

That this debtor class had developed a strong consciousness of identical interests in the several states is clearly evident in local politics and legislation.[^[38]] Shays’ Rebellion in Massachusetts, the disturbances in Rhode Island, New Hampshire, and other northern states, the activities of the paper-money advocates in state legislatures, the innumerable schemes for the relief of debtors, such as the abolition of imprisonment, paper money, laws delaying the collection of debts, propositions requiring debtors to accept land in lieu of specie at a valuation fixed by a board of arbitration,—these and many other schemes testify eloquently to the fact that the debtors were conscious of their status and actively engaged in establishing their interest in the form of legal provisions. Their philosophy was reflected in the writings of Luther Martin, delegate to the Convention from Maryland, who disapproved of the Constitution, partly on the ground that it would put a stop to agrarian legislation.[^[39]]

2. The second group of landed proprietors, the manorial lords of the Hudson valley region, constituted a peculiar aristocracy in itself and was the dominant class in the politics of New York during the period between the Revolution and the adoption of the Constitution, as it had been before the War. It was unable or unwilling to block the emission of paper money, because the burden of that operation fell on the capitalists rather than itself. It also took advantage of its predominance to shift the burden of taxation from the land to imports,[^[40]] and this fact contributed powerfully to its opposition to the Constitution, because it implied a transference of the weight of taxation for state purposes to the soil. Its spokesmen indulged in much high talk of state’s rights, in which Federalist leaders refused to see more than a hollow sham made to cover the rural gentry’s economic supremacy.

3. The third group of landed proprietors were the slave-holders of the south. It seems curious at the first glance that the representatives of the southern states which sold raw materials and wanted competition in shipping were willing to join in a union that subjected them to commercial regulations devised immediately in behalf of northern interests. An examination of the records shows that they were aware of this apparent incongruity, but that there were overbalancing compensations to be secured in a strong federal government.[^[41]]

Money-lending and the holding of public securities were not confined to the north by any means; although, perhaps, as Calhoun long afterward remarked,[^[42]] the south was devoid of some of the artifices of commerce which characterized New England. Neither were attempts at relieving debtors by legislative enactment restricted to Massachusetts and Rhode Island. The south had many men who were rich in personalty, other than slaves, and it was this type, rather than the slaveholding planter as such, which was represented in the Convention that framed the Constitution. The majority of the southern delegates at Philadelphia in 1787 were from the towns or combined a wide range of personalty operations with their planting. On this account there was more identity of interest among Langdon of Portsmouth, Gerry of Boston, Hamilton of New York, Dayton of New Jersey, Robert Morris of Philadelphia, McHenry of Baltimore, Washington on the Potomac, Williamson of North Carolina, the Pinckneys of Charleston, and Pierce of Savannah than between these several men and their debt-burdened neighbors at the back door. Thus nationalism was created by a welding of economic interests that cut through state boundaries.

The southern planter was also as much concerned in maintaining order against slave revolts as the creditor in Massachusetts was concerned in putting down Shays’ “desperate debtors.” And the possibilities of such servile insurrections were by no means remote. Every slave-owner must have felt more secure in 1789 when he knew that the governor of his state could call in the strong arm of the federal administration in case a domestic disturbance got beyond the local police and militia. The north might make discriminatory commercial regulations, but they could be regarded as a sort of insurance against conflagrations that might bring ruin in their train. It was obviously better to ship products under adverse legislation than to have no products to ship.

GROUPS OF PERSONAL PROPERTY INTERESTS

A second broad group of interests was that of personal property as contrasted with real property. This embraced, particularly, money loaned, state and continental securities, stocks of goods, manufacturing plants, soldiers’ scrip, and shipping. The relative proportion of personalty to realty in 1787 has not been determined and it is questionable whether adequate data are available for settling such an important matter.[^[43]]

Personalty in Money.—Although personalty in the form of money at interest or capital seeking investment did not constitute in 1787 anything like the same amount, relative to the value of real estate, which it does to-day, it must not be thought that it was by any means inconsiderable in any state. The tax returns of New Hampshire for 1793 report the value of all buildings and real estate as £893,327:16:10 and the amount of money on hand or at interest as £35,985:5:6. The Massachusetts tax returns of 1792 show £196,698:4:6 at interest and £95,474:4:5 on hand. The Connecticut returns for 1795 show £63,348: 10:1 at interest.[^[44]]

Money capital was suffering in two ways under the Articles of Confederation. It was handicapped in seeking profitable outlets by the absence of protection for manufactures, the lack of security in investments in western lands, and discriminations against American shipping by foreign countries. It was also being positively attacked by the makers of paper money, stay laws, pine barren acts, and other devices for depreciating the currency or delaying the collection of debts. In addition there was a widespread derangement of the monetary system and the coinage due to the absence of uniformity and stability in the standards.[^[45]]

Creditors, naturally enough, resisted all of these schemes in the state legislatures, and failing to find relief there at length turned to the idea of a national government so constructed as to prevent laws impairing the obligation of contract, emitting paper money, and otherwise benefiting debtors. It is idle to inquire whether the rapacity of the creditors or the total depravity of the debtors (a matter much discussed at the time) was responsible for this deep and bitter antagonism. It is sufficient for our purposes to discover its existence and to find its institutional reflex in the Constitution. It was to the interest of the creditors to see the currency appreciate, to facilitate the process for securing possession of forfeited mortgaged property, and to hold the rigor of the law before the debtor who was untrue to his obligations. Whether the creditors were driven into class consciousness by the assaults of their debtors or attained it by the exercise of their wits is, for scientific purposes, immaterial.

Personalty in Public Securities.—Even more immediately concerned in the establishment of a stable national government were the holders of state and continental securities. The government under the Articles of Confederation was not paying the interest on its debt and its paper had depreciated until it was selling at from one-sixth to one-twentieth of its par value.[^[46]] Grave uncertainties as to the actions of legislatures kept state paper at a low price, also, even where earnest attempts were being made to meet the obligations.

The advantage of a strong national government that could discharge this debt at its face value is obvious; and it was fully understood at the time. The importance of this element of personalty in forcing on the revolution that overthrew the Articles of Confederation is all the more apparent when it is remembered that securities constituted a very large proportion of the intangible wealth. In Massachusetts, for example, it is set down in 1792 at a sum greater than all the money at interest and on hand in the state.[^[47]]

The amount of the public securities of the United States and of the several states at the establishment of the new government was estimated by Hamilton, in his first report on credit, as Secretary of the Treasury.[^[48]] The foreign debt, that is, money borrowed abroad, was fixed at $10,070,307 and arrears of interest up to December, 1789, were estimated at $1,640,071.62, making a total of $11,710,378.62. The domestic continental debt, including the registered debt, army certificates, etc., amounted to $27,383,917.74, to which was added arrears of interest to the amount of $13,030,168.20, making a total of $40,414,085.94. The amount of the state debts was unknown in 1790, but Hamilton placed it at about $25,000,000, which appears to have been rather high. The issue, later authorized to cover them, was $21,500,000 and the amount actually paid out was $18,271,786.47.[^[49]]

The enormous total of the national debt after state and national securities were funded is shown by Hamilton’s report of January 16, 1795:—

In addition to this sum, there was an amount of $1,400,000 due to the Bank of the United States on account of the loan from that institution, but this was more than counterbalanced by the value of the stock.[^[50]]

It is evident from this statement that a vast mass of state and continental securities was scattered throughout the country in 1787. The degree of its concentration or distribution cannot be determined until the Domesday Books of the Treasury Department have been carefully studied, and their incompleteness makes an absolute statement impossible. The value of this paper in the hands of the holders in the spring when the Convention met cannot be ascertained with mathematical precision, for prices varied from state to state. Furthermore, the prices obtained by the holders of public paper after Hamilton’s funding system had gone into effect can only be roughly estimated, for it depends upon the market in which they were sold. For example, 6 per cents were bringing 17 shillings in the pound on March 5, 1791, and 22 shillings in the pound on October 3, 1792. On these dates, deferred sixes were 9/1 and 13/7, respectively, and 3 per cents were 9/1 and 13/1, respectively.[^[51]]

If we leave out of account the foreign debt, it appears that some $60,000,000 worth of potential paper lay in the hands of American citizens in the spring of 1787. This paper was changing hands all of the time at varying prices. The common selling price in good markets before the movement for the Constitution got under way ranged from one-sixth to one-tenth its face value; and some of it sold as low as twenty to one. In fact, many holders regarded continental paper as worthless, as it might have been had the formation of the Constitution been indefinitely delayed. It seems safe to hazard a guess, therefore, that at least $40,000,000 gain came to the holders of securities through the adoption of the Constitution and the sound financial system which it made possible. This leaves out of account the large fortunes won by the manipulation of stocks after the government was established and particularly after the founding of the New York Stock Exchange in 1792.[^[52]]

It should be pointed out, however, that this was not all gain for the original holders of public paper, that is, for those who had loaned the Revolutionary government money or had rendered it services during the War. Nevertheless, they would have lost all their continental securities under the prevailing methods of the Congress. As Pitkin points out, “The interest of the debt was unpaid, public credit was gone, the debt itself was considered of little value, and was sold at last by many of the original holders for about one-tenth of its nominal value.”[^[53]] From this point of view, the appreciation due to the adoption of the new government was so much clear gain, even to original holders; and in some states more than one-half of the paper had passed into the hands of speculators at low figures.

The significance of this huge national debt and of the enormous gain made in the appreciation of securities can be understood only in comparison with other forms of wealth at that time. Unfortunately, our statistics for the period of the formation of the Constitution are meagre, but under an act of Congress passed in 1798 a valuation of lands was made for the purposes of direct taxation. The surveys were made between the years 1798 and 1804. The following table[^[54]] exhibits the value of lands (not including houses, which amounted to more than $140,000,000 in addition) in each of the states at the close of the eighteenth century, and also the amount of money paid out by the loan offices of the respective states for the year 1795 in discharging the interest on the public debt and the payment of 2 per cent towards the reimbursement of the 6 per cent stocks held in the several commonwealths:—

[55]. No table showing the capital amount of the loan office books of the states after the funding was complete was discovered, so that interest payment is given here.

To the total amount of payments made through the loan offices must be added the payments made at the Treasury on the securities registered there, bringing the total annual interest and capital disbursements to $2,727,959.07.

It seems safe to assume from the table that $400,000,000 would cover the total taxable value of all the lands in the thirteen states in 1787.[^[56]] Very probably the estimate should be much lower, but letting the figures stand at this amount, it will be seen that an advance of $40,000,000 in securities would have represented one-tenth of the total taxable value of all the land in the thirteen United States at the time of the formation of the Constitution.

To put the matter in another way: The amount gained by public security holders through the adoption of the new system was roughly equivalent to the value of all the lands as listed for taxation in Connecticut. It was but little less than the value of the lands in New Hampshire, Vermont, and Rhode Island. It was about equivalent to one-half the value of the lands in New York and to two-thirds the value of the lands in Massachusetts. It amounted to at least ten dollars for every man, woman, and child in the whole United States from New Hampshire to Georgia.[^[57]]

The significance of the figures showing the annual interest disbursement also when the debt had been funded becomes evident only by comparison. Tench Coxe, as commissioner of the revenue, estimated the amount of goods, wares, and merchandise exported from the United States between October 1, 1791, and September 30, 1792, at $21,005,568. In other words, the annual interest on the domestic debt was more than one-tenth the total value of the goods exported annually. The average imports for each of the three years ending March 4, 1792, was $19,150,000, so that the interest on the domestic debt was more than one-tenth of the value of the goods imported into the United States.[^[58]]

One of the most potent effective forces of these public securities was the Society of the Cincinnati which was composed of the officers of the Revolutionary Army organized into local branches in the several states. Like other soldiers, the members of this order had been paid for their patriotic services partly in land warrants and depreciated paper; but unlike the privates, they were usually men of some means and were not compelled to sacrifice their holdings to speculators at outrageously low prices. The members of this Society appear in large numbers on the loan office records of the several states preserved in the Treasury Department; and many, if not all, of the state branches had funds derived from this source.

The political influence of the Society was recognized in the Convention. When the popular election of President was under consideration, Gerry objected to it. “The ignorance of the people,” he said, “would put it in the power of some one set of men dispersed through the Union and acting in concert to delude them into any appointment. He observed that such a Society of men existed in the Order of the Cincinnati. They were respectable, United, and influential. They will in fact elect the chief Magistrate in every instance, if the election be referred to the people—His respect for the characters composing this Society could not blind him to the danger and impropriety of throwing such a power into their hands.”[^[59]] In this view Colonel Mason concurred.[^[60]]

An observant French chargé d’affaires, writing to his home secretary of state for foreign affairs in June, 1787, calls attention to the weight of the Order of the Cincinnati in the movement for a new government, but remarks that their power has been greatly exaggerated. “Les Cincinnati,” he says, “c’est à dire les officiers de l’ancienne armée américaine, sont intéressés à l’éstablissement d’un Gouvernement solide, puisqu’ils sont tous créanciers du public, mais, considérant la foiblesse du Conseil national et l’impossibilité d’être payés par la présente administration, ils proposent de jeter tous les États dans une seule masse et de mettre à leur tête le gai. Washington avec toutes les prérogatives et les pouvoirs d’une tête couronné.” He also says that they threaten a revolution by arms in case the Convention fails, but adds that this project is too extravagant to merit the least consideration.[^[61]]

This society was, however, compactly organized. Correspondence among the members was frequent, extensive, and frank. Almost uniformly, they were in favor of a reconstruction of the national government on a stronger basis.[^[62]] They were bitter in their denunciation of the popular movements in the states; particularly Shays’ revolt in Massachusetts. War had given them a taste for strong measures, and the wretched provisions which had been made for paying them for their military services gave them an economic interest in the movement to secure a government with an adequate taxing power. Moreover, they were consolidated by the popular hostility to them on account of their “secret” and “aristocratic” character.

Personalty in Manufacturing and Shipping.—The third group of personalty interests embraced the manufacturing population, which was not inconsiderable even at that time. A large amount of capital had been invested in the several branches of industry and a superficial study of the extensive natural resources at hand revealed the immense possibilities of capitalistic enterprise. The industrial revolution was then getting under way in England and the fame of Arkwright was being spread abroad in the land. In the survey of the economic interests of the members of the federal Convention, given below, it is shown that a few leading men were directly connected with industrial concerns, although it is not apparent that the protection of industries was their chief consideration, in spite of the fact that they did undoubtedly contemplate such a system. But outside of the Convention vehement appeals were made by pamphleteers for protection, on the score that the discriminatory measures of Great Britain were disastrous to American economic independence.

As early as April, 1785, a memorial from prominent merchants and business men of Philadelphia was laid before the legislature of the state lamenting that Congress did not have “a full and entire power over the commerce of the United States,” and praying that the legislature request Congress to lay a proposal conferring such a power before the states for their ratification. The memorialists assured the legislature that there was a “disposition in the mercantile interest of Pennsylvania favorable thereto.”[^[63]] Among the signers were T. Fitzsimons and George Clymer, who were destined to sit in the constitutional Convention as representatives of the state of Pennsylvania and of the mercantile interest which they had so much at heart.

The supporters of the Constitution were so earnest and so persistent in their assertion that commerce was languishing and manufactures perishing for the lack of protection that there must have been some justification for their claims, although it is impossible to say how widespread the havoc really was. The exaggeration of danger threatened by a tariff reduction is not peculiar to our times; it was sharply marked in older days. That the consumer suffered from the lack of the protection sought in 1787 by merchants and manufacturers is not apparent. Indeed the “mechanics and manufacturers of New York” in their humble petition to Congress for relief in 1789 complain that “their countrymen have been deluded by an appearance of plenty; by the profusion of foreign articles which has deluged the country; and thus have mistaken excessive importation for a flourishing trade. To this deception they [the petitioners] impute the continuance of that immoderate prepossession in favor of foreign commodities which has been the principal cause of their distresses, and the subject of their complaint.”[^[64]]

That innumerable manufacturing, shipping, trading, and commercial interests did, however, look upon the adoption of the Constitution as the sure guarantee that protection could be procured against foreign competition, is fully evidenced in the memorials laid before Congress in April, May, and June, 1789, asking for the immediate enactment of discriminatory tariff laws.[^[65]]

The first of these petitions was from Baltimore in particular and Maryland generally, and was communicated to the House of Representatives on April 11, 1789, a few days after that body had settled down to business. The second was laid before the House a week later by a committee representing the mechanics and manufacturers of New York. On May 25, 1789, the shipwrights of Philadelphia laid their pleas before Congress; and on June 5, the tradesmen and manufacturers of Boston put in their appearance. These petitions for protection from the four great trading and shipping centres of the country, Baltimore, Philadelphia, New York, and Boston, which had been most zealous in securing the establishment of the new government, are in themselves eloquent documents for the economic interpretation of the Constitution.

The first of these, from Baltimore, bears the names of two members of the federal Convention from that state, Daniel Carroll and James McHenry, and the names of two or three hundred other citizens of that community, the analysis of whose politico-economic connections would doubtless repay the detailed scrutiny which the painful labor would entail. The petition cites the sad state of decline in which manufacturing and trading interests have been since the close of the Revolution and the ineffectual attempts of the states acting alone to remedy the evils. “The happy period having now arrived,” the memorialists exultingly exclaim, “when the United States are placed in a new situation; when the adoption of the General Government gives one sovereign Legislature the sole and exclusive power of laying duties upon imports; your petitioners rejoice at the prospect this affords them, that America, freed from the commercial shackles which have so long bound her, will see and pursue her true interest, becoming independent in fact as well as in name; and they confidently hope that the encouragement and protection of American manufactures will claim the earliest attention of the supreme Legislature of the nation.”

The Maryland petitioners are conscious of no narrow motives in asking for relief at the hands of the government: “the number of her poor increasing for want of employment; foreign debts accumulating; houses and lands depreciating in value; trade and manufactures languishing and expiring”—these are the evidences of need for the expected legislation. They, therefore, ask for duties on all foreign articles that can be made in America, which will give “a just and decided preference to their labors.” And lest Congress might not understand the precise character of the relief for which they ask, they append a long list of articles, which are, or can be, manufactured in Maryland, and on which protection is needed—including ships, hardware, clocks, boots, shoes, saddles, brushes, food-stuffs, and raw iron, to mention only a few.

The second petition, from the mechanics and manufacturers of New York, recites how the memorialists had expected great prosperity on the successful issue of the Revolution and had seen their hopes blasted “by a system of commercial usurpation, originating in prejudices, and fostered by a feeble government.” They had struggled in vain against dire adversity and “wearied by their fruitless exertions, your petitioners have long looked forward with anxiety to the establishment of a government which would have the power to check the growing evil, and extend a protecting hand to the interests of commerce and the arts. Such a government is now established. On the promulgation of the Constitution just now commencing its operations, your petitioners discovered in its principles the remedy which they had so long and so earnestly desired. They embraced it with ardor, and have supported it with persevering attachment.” Lest Congress might not have the information necessary for the formulation of a protective tariff on correct principles, the petitioners subjoined a list of articles manufactured in the state and susceptible of protection.

The petitioners from Philadelphia, humbly seeking protection for shipping, lament that the tonnage built at that harbor has fallen to about one-third the amount constructed before the Revolution, and call attention to the fact that the British navigation act totally prevents them from building for English customers. They add that they “have waited, with anxious expectation, for the sitting of the honourable Congress under the new Constitution of the United States, firmly relying that every exertion would be used to reinstate so necessary and useful a branch of business.” Like the representatives from Baltimore and New York, they append for the information of Congress a list of suggestions as to the best method of protecting American shipping interests.

Finally come the manufacturers and ship builders of Boston. Ship-building with them has also declined since the Revolution, and the revival of manufacturing in the north depends upon adequate protection from the federal government. Accordingly they request that “heavy duties may be laid on such articles as are manufactured by our own citizens, humbly conceiving that the impost is not solely considered by Congress as an object of revenue, but, in its operation, intended to exclude such importations, and, ultimately, establish these several branches of manufacture among ourselves.” Rope-makers, hatters, pewterers, soapboilers, and tallow-chandlers, wool card-makers, ship-carvers, sailmakers, cabinet-makers, coachmakers, tailors, cordwainers, glue and starch makers, brass-founders, and coppersmiths are among the memorialists.

In the processions which celebrated the adoption of the Constitution in Boston, Philadelphia, Baltimore, Charleston, and New York, the several local manufacturing concerns were extensively represented by floats and banner-men, which shows that they were not unaware of the gain that had been made in their favor by the establishment of the new system. But it must not be supposed that the consolidation of interests in support of the Constitution was purely local in character. On the contrary it was nationwide.

Immediately after the Revolution the local groups were being welded into a national interest by correspondence committees. Before the formation of the Constitution, Boston merchants were sending out appeals to other merchants in the several states to join in a national movement for protection; and before the new government went into effect, they were active in stirring up united action among the merchants and manufacturers of the whole country. In 1788, a committee of the association of Boston merchants and manufacturers sent out a circular to “their brethren in the several seaports of the union,” asking for cooperation in this grave juncture.[^[66]] To this Boston appeal are appended the names of John Gray, Gibbins Sharp, Benjamin Austin, Jr., Larson Belcher, William Hawes, and Joshua Witherle—all of whom signed the petition addressed to Congress the following year asking for protection.[^[67]]

During the struggle over the reconstruction, the advocates of a constitution made use of the argument that the consumption of foreign luxuries, manufactured stuffs, was one of the chief causes of the economic distress which was said to prevail; and declared that national legislation was the only source of relief from this heavy importation. A writer in the American Museum for February, 1787, complains that “the articles of rum and tea alone, which are drank in this country, would pay all its taxes. But when we add sugar, coffee, gauzes, silks, feathers, and the whole list of baubles and trinkets, what an enormous expense! No wonder you want paper currency. My countrymen are all grown very tasty. Feathers and jordans must all be imported. Certainly, gentlemen, the devil is among you. A Hampshireman, who drinks forty shillings worth of rum in a year and never thinks of the expense, will raise a mob to reduce the governor’s salary.”[^[68]]

The Connecticut Courant, of November 12, 1787, in an argument for ratification declares: “In the harbour of New York there are now 60 ships of which 55 are British. The produce of South Carolina was shipped in 170 ships, of which 150 were British.... Surely there is not any American who regards the interest of his country but must see the immediate necessity of an efficient federal government; without it the Northern states will soon be depopulated and dwindle into poverty, while the Southern ones will become silk worms to toil and labour for Europe.”

It is worthy of remark, however, that the gloomy view of economic conditions persistently propagated by the advocates of a new national system was not entertained by all writers of eminence and authority. One of the members of the Convention, Franklin, early in 1787, before the calling of that assembly, declared that the country was, on the whole, so prosperous that there was every reason for profound thanksgiving.[^[69]] He mentioned, it is true, that there were some who complained of hard times, slack trade, and scarcity of money, but he was quick to add that there never was an age nor a country in which there were not some people so circumstanced as to find it hard to make a living and that “it is always in the power of a small number to make a great clamour.” But taking the several classes in the community as a whole, prosperity, contended Franklin, was widespread and obvious. Never was the farmer paid better prices for his products, “as the published prices current abundantly testify. The lands he possesses are continually rising in value.” In no part of Europe are the laboring poor so well paid, fed, or clothed. The fishing trade, he thinks, is in a rather bad way, and mercantile branches are overcrowded; but he is not distressed by the extensive importation of English goods, because this is nothing new, and America has prospered in spite of it.

It may very well be that Franklin’s view of the general social conditions just previous to the formation of the Constitution is essentially correct and that the defects in the Articles of Confederation were not the serious menace to the social fabric which the loud complaints of advocates of change implied. It may be that “the critical period” was not such a critical period after all; but a phantom of the imagination produced by some undoubted evils which could have been remedied without a political revolution. It does not seem to have occurred to those historians, who have repeated without examination Fiske’s picturesque phrase that it is a serious matter to indict a whole system, an entire epoch, and a whole people. It does not appear that any one has really inquired just what precise facts must be established to prove that “the bonds of the social order were dissolving.” Certainly, the inflamed declarations of the Shaysites are not to be taken as representing accurately the state of the people, and just as certainly the alarmist letters and pamphlets of interested persons on the other side are not to be accepted without discount. When it is remembered that most of our history has been written by Federalists, it will become apparent that great care should be taken in accepting, without reserve, the gloomy pictures of the social conditions prevailing under the Articles of Confederation. In fact, a very learned, though controversial, historian, Henry B. Dawson, in an article published more than forty years ago makes out quite a plausible case (documented by minute research) for the statement that the “chaos” of which historians are wont to speak when dealing with the history of the years 1783–87, was a creation of their fancies.[^[70]]

However this may be, and whether or not Franklin’s view is correct,[^[71]] it cannot be denied that the interests seeking protection were extensive and diversified. This is conclusively shown by the petitions addressed to public bodies, by the number of influential men connected with the movement, and by the rapidity with which the new government under the Constitution responded to their demands.

Capital invested in Western Lands.—Although companies had been formed to deal in western lands on a large scale before the Revolution, it was not until the close of the War that effective steps were taken toward settlement. At that time, says Professor Haskins, “the number of emigrants, the cheapness of the lands, and the lack of an established system of sale in small quantities offered many inducements for the formation of great land companies whose opportunities for speculation were increased by the depreciated currency and general ignorance concerning the West.... ‘All I am now worth was gained by speculations in land,’ wrote Timothy Pickering [^[72]]

The situation was this: Congress under the Articles of Confederation adopted a policy of accepting certificates in part payment for lands; and it was hoped by some that the entire national debt might be extinguished in this way. However, the weakness of the Confederation, the lack of proper military forces, the uncertainty as to the frontiers kept the values of the large sections held for appreciation at an abnormally low price. Those who had invested their funds in these lands or taken stocks in the companies felt the adverse effects of the prevailing public policy, and foresaw the benefits which might be expected from a new and stable government. Their view was tersely put by Williamson, a member of the Convention from North Carolina, in a letter to Madison on June 2, 1788: “For myself, I conceive that my opinions are not biassed by private Interests, but having claims to a considerable Quantity of Land in the Western Country, I am fully persuaded that the Value of those Lands must be increased by an efficient federal Government.”[^[73]]

The weight of the several species of property in politics is not determined by the amount, but rather by the opportunities offered to each variety for gain and by the degree of necessity for defence against hostile legislation designed to depreciate values or close opportunities for increments. When viewed in this light the reason for the special pressure of personalty in politics in 1787 is apparent. It was receiving attacks on all hands from the depreciators and it found the way to profitable operations closed by governmental action or neglect. If we may judge from the politics of the Congress under the Articles of Confederation, two related groups were most active: those working for the establishment of a revenue sufficient to discharge the interest and principal of the public debt, and those working for commercial regulations advantageous to personalty operations in shipping and manufacturing and in western land speculations.[^[74]]

It should be remembered also that personalty is usually more active than real property. It is centralized in the towns and can draw together for defence or aggression with greater facility. The expectation of profits from its manipulation was much larger in 1787 than from real property. It had a considerable portion of the professional classes attached to it; its influence over the press was tremendous, not only through ownership, but also through advertising and other patronage.[^[75]] It was, in short, the dynamic element in the movement for the new Constitution.

CHAPTER III
THE MOVEMENT FOR THE CONSTITUTION

Did the system of government prevailing in the United States in 1787 affect adversely any of the economic interests enumerated in the preceding chapter? Furthermore, were the leaders in the movement which led to the adoption of the Constitution representatives of the interests so affected?

Fortunately, it is not necessary to devote any considerable attention to the first of these questions. It is answered in part above, and all of the standard treatises show conclusively that the legal system prevailing at the opening of 1787 was unfavorable to the property rights of four powerful groups above enumerated.[^[76]] That system was, in brief, as follows. There was a loose union of thirteen sovereign states under the Articles of Confederation. The national government consisted of a legislature of one house in which the states had an equal voting power. There was no executive department and no general judiciary. The central government had no power to regulate commerce or to tax directly; and in the absence of these powers all branches of the government were rendered helpless. Particularly, money could not be secured to pay the holders of public securities, either their interest or principal. Under this system, the state legislatures were substantially without restrictions or judicial control; private rights in property were continually attacked by stay laws, legal tender laws, and a whole range of measures framed in behalf of debtors; and in New England open rebellion had broken out.

That the economic groups in question looked to a new national government as the one source of relief and advantage, is shown in a hundred contemporary pamphlets and newspaper articles. It was in fact the topic of the times.

For example, a letter from Philadelphia, under date of August 29, 1787, sums up concisely the interests which were turning to the new Constitution: “The states neglect their roads and canals, till they see whether those necessary improvements will not become the objects of a national government. Trading and manufacturing companies suspend their voyages and manufactures till they see how far their commerce will be protected and promoted by a national system of commercial regulations. The lawful usurer locks up or buries his specie till he sees whether the new frame of government will deliver him from the curse or fear of paper money and the tender laws.... The public creditor, who, from the deranged state of finances in every state and their total inability to support their partial funding systems, has reason to fear that his certificates will perish in his hands, now places all his hopes of justice in an enlightened and stable national government. The embarrassed farmer and the oppressed tenant, who wishes to become free ... by emigrating to a frontier country, wait to see whether they shall be protected by a national force from the Indians.”[^[77]]

A final answer to the second question propounded above would require an exhaustive analysis of the “movement for the Constitution,” in the following form:—

1. A study of the economic forces in the Revolution and particularly in the Continental Congress that drafted the Articles of Confederation.

2. An inquiry into the first signs of discontent with the prevailing system, their geographic distribution, and their economic sources.

3. An examination of the several attempts in the Congress under the Articles of Confederation to secure the power to regulate commerce and establish a revenue for discharging the debt.

4. A description of the economic interests of all the members who were most active in these attempts.

5. A description of the economic forces in the communities whose representatives in Congress were zealous in securing a revision of the Articles.

6. A study of the nature and distribution of the several legislative attacks on private rights in property between 1783 and 1787.

7. A minute study of the personnel of the movement for revision and the economic interests of the leading spirits in Congress and the state legislatures and outside of legislative chambers.

Any one superficially acquainted with the sources of American history will see at once the nature of the work which must be done to secure the raw materials for such a study. The enormous mass of unprinted papers of the Continental Congress in the Library at Washington would have to be thoroughly searched; proceedings in state legislatures during the years under consideration would have to be scrutinized; local archives and newspapers would have to be examined.

In the present state of our historical materials, therefore, all that can be attempted here is a superficial commentary on some of the outward aspects of the movement for the Constitution which are described in the conventional works on the subject. Many of the eminent men prominently identified with the events which led up to the Convention of 1787 were themselves members of that Assembly, and their economic interests are considered below in Chapter V. But it is not without significance to discover that some of the leading men outside of the Convention who labored for an overthrow of the old system were also directly interested in the results of their labors.

As early as January, 1781, General Philip Schuyler moved in the senate of New York “to request the eastern states to join in an early convention, which should form a perpetual league of incorporation, subservient, however, to the common interest of all the states; invite others to accede to it; erect Vermont into a state; devise a fund for the redemption of the common debts; substitute a permanent and uniform system for temporary expedients; and invest the confederacy with powers of coercion.”[^[78]] General Schuyler was a large holder of depreciated securities.[^[79]]

In February, 1781, Congress recommended to the states that they vest in the national legislature a power to levy a duty to pay the principal and interest of the debt. In April, 1783, Congress again appealed to the states for authority to lay duties for the purpose of supplying a revenue with which to discharge the debt. Among the leaders in Congress who favored this increase in power were Gorham, Higginson, Ellsworth, Dyer, Boudinot, Fitzsimons, Williamson, Izard, Johnson, and King, all of whom held securities which were daily depreciating under the failure of the government to meet its just obligations.[^[80]]

In 1785, Governor Bowdoin, of Massachusetts, in his inaugural address urged the necessity of a stronger union with larger powers, and recommended a convention to deliberate upon the whole matter.[^[81]] Governor Bowdoin was a large holder of public securities.[^[82]] The legislature of the commonwealth, thereupon, resolved that the Articles of Confederation were inadequate, and directed the representatives in Congress to take steps looking toward a strengthening of the union; but they failed to act.

Men less eminent than Bowdoin and Schuyler were being educated in Federalism by the march of events. In Boston merchants were petitioning Congress for relief from British discriminations[^[83]]; in the Virginia legislature the representatives of the commercial interests were learning their lessons[^[84]]; the demands for positive action were increasing daily in number. Every failure to find a remedy under the Articles of Confederation only served to augment the ranks of those who were ready for a complete reconstruction of the prevailing system.

A few illustrations will serve to show how the demand for reform was being fostered and also the connection between the leaders in the agitation and the personnel of the public bodies which later achieved the great work of framing and ratifying the Constitution. Even before the war was over and the Articles of Confederation tested in a time of peace, the inability of the government under it to afford defence to commerce on the high seas was deplored by merchants whose vessels were falling prey to the British. In April, 1782, a number of prominent merchants presented a petition to Congress in which they lamented the British depredations on American trade and the want of adequate naval protection at sea.[^[85]] Among the signers of this petition were several men who were later known as warm supporters of a strong federal government. One of them, Thomas Fitzsimons, was a member of the Convention which drafted the Constitution; another, John Barclay, was a member of the Pennsylvania convention and voted in favor of the ratification of the new system of government.

Six years before the Convention met in Philadelphia, the disordered financial system under the Confederation was the subject of protest by interested parties. In 1781, “divers inhabitants of the state of Pennsylvania,” were petitioning Congress to take some action designed to put the credit of the country on a sound basis.[^[86]] Thus runs the petition: “Humbly sheweth that whereas you thought fit heretofore in the course of your wisdom to emit bills of credit for good and great purposes, but the same depreciating to such an amazing degree beyond the expectation of all living did therefore lay open wide door for the most monstrous and absurd injustices by fraudulent payments which we conclude is directly contrary to your good and great purposes in emitting the same, we therefore, not only firmly relying on the extraordinary clearness of the circumstances of our agrievances, but likewise on the uprightness of your understandings, Do therefore presume to pray your honors would be pleased to recommend to the several states to adopt such measures as they may think most likely to afford a safe and effectual redress to all such agrievances....”[^[86]] Among the signers to this petition are Thomas Bull, John Hannum, and Thomas Cheyney, who six years later as members of the Pennsylvania convention had the pleasure of voting for the ratification of an instrument of government that put an end to the evils against which they had so earnestly protested.

The failure of repeated attempts in Congress to secure an amendment authorizing the laying of impost duties, the refusal of the states to pay the requisitions made by Congress, and the obvious impossibility of gaining their ends through the ordinary channels of ratification by state legislatures, drove the advocates of these measures to desperation. Republican government, as it had been tried out, had failed to secure for personalty that protection and opportunity for advancement which it enjoyed under monarchy. The despair of the representatives of the property interests thus jeopardized and their readiness for some heroic measures were fully manifest in the correspondence of the time.

Washington, who was not given to undue alarms, wrote to John Jay from Mount Vernon, on August 1, 1786, to the effect that men of leadership were ready for drastic action: “What astonishing changes,” he said, “a few years are capable of producing. I am told that even respectable characters speak of a monarchical form of Government without horror. From thinking proceeds speaking, thence to acting is often but a single step. But how irrevocable and tremendous! What a triumph for our enemies to verify their predictions—what a triumph for the advocates of despotism to find that we are incapable of governing ourselves, & that systems founded on the basis of equal liberty are merely ideal & fallacious! Would to God that wise measures may be taken in time to avert the consequences we have but too much reason to apprehend.”[^[87]]

Later in that year, General Knox, who was a holder of public securities, wrote to Washington in the following strain: “The people who are the insurgents [Shaysites] have never paid any, or but very little taxes—But they see the weakness of government; They feel at once their own poverty, compared with the opulent, and their own force, and they are determined to make use of the latter, in order to remedy the former. Their creed is ‘That the property of the United States has been protected from the confiscations of Britain by the joint exertions of all, and therefore ought to be the common property of all. And he that attempts opposition to this creed is an enemy to equity and justice, and ought to be swept from off the face of the earth.’ In a word they are determined to annihilate all debts public and private and have agrarian Laws, which are easily effected by means of unfunded paper money which shall be a tender in all cases whatever—

“The numbers of these people may amount in Massachusetts to about one fifth part of several populous counties, and to them may be collected, people of similar sentiments, from the states of Rhode Island, Connecticut, and New Hampshire so as to constitute a body of 12 or 15000 desperate & unprincipled men—They are chiefly of the young and active part of the community, more easily collected than perhaps kept together afterwards—But they will probably commit overt acts of treason which will compel them to embody for their own safety—once embodied they will be constrained to submit to discipline for the same reason. Having proceeded to this length for which they are now ripe, we shall have a formidable rebellion against reason, the principle of all government, and the very name of liberty. This dreadful situation has alarmed every man of principle and property in New England. They start as from a dream, and ask what has been the cause of our delusion? what is to afford us security against the violence of lawless men? Our government must be braced, changed, or altered to secure our lives and property. We imagined that the mildness of our government and the virtue of the people were so correspondent, that we were not as other nations requiring brutal force to support the laws—But we find that we are men, actual men, possessing all the turbulent passions belonging to that anim[al] and that we must have a government proper and adequate for him. The people of Massachuse[tts] for instance, are far advanced in this doctrine, and the men of reflection, & principle, are determined to endev[or] to establish a government which shall have the power to protect them in their lawful pursuits, and which will be efficient in all cases of internal commotions or foreign invasions—They mean that liberty shall be the basis, a liberty resulting from the equal and firm administration of the laws. They wish for a general government of unity as they see the local legislatures must naturally and necessarily tend to retard and frustrate all general government.”[^[88]]

A few months later, Madison, writing to Edmund Pendleton from New York, the seat of the government, corroborated the views expressed by Washington and Knox and set forth what he conceived to be the desperate state of republican government. His letter, dated February 24, 1787, three days after Congress had issued the call for a national Convention, ran as follows: “In general I find men of reflection much less sanguine as to a new than despondent as to the present System. Indeed the Present System neither has nor deserves advocates; and if some very strong props are not applied will quickly tumble to the ground.... If the approaching Convention should not agree on some remedy, I am persuaded that some very different arrangement will ensue. The late turbulent scenes in Massachusetts & infamous ones in Rhode Island, have done inexpressible injury to the republican character in that part of the U. States; and a propensity towards Monarchy is said to have been produced by it in some leading minds. The bulk of the people will probably prefer the lesser evil of a partition of the Union into three more practicable and energetic Governments. The latter idea I find after long confinement to individual speculations & private circles, is beginning to show itself in the Newspapers.”[^[89]]

A few days after this letter was written by Madison, John Armstrong wrote to Washington from Carlisle that the suppression of the insurrection in Massachusetts had not allayed the fears of leading men in his state. “The alarming flame in Massachusetts,” he says, “seems nearly extinguished, but if the subsequent measures of that State respecting the insurgents should be severe, amounting to death, Confiscation, or disfranchisement, the consequence may be bad, as tending to reinkindle the flame. Shall I tell you in confidence, I have now twice heard, nor from low authority (some principal men of that State) begin to talk of wishing one general Head to the Union, in the room of Congress!”[^[90]]

By correspondence such as this just cited, by an increasing recognition of the desperate straights in which they were placed, a remarkable fusion of interested forces was effected. The wealth, the influence, and a major portion of the educated men of the country were drawn together in a compact group, “informed by a conscious solidarity of interests,” as President Wilson has so tersely put it.[^[91]]

Having failed to obtain relief through the regular channels of amendment by Congress ratified by the state legislatures, the leaders struck out on a new path. Operating through the Virginia legislature, they secured a resolution inviting the sister commonwealths to send delegates to a convention at Annapolis to take into consideration the trade and commercial system of the United States.[^[92]] The convention duly met, but the attendance was so slim that, as Professor Burgess has put it, “a coup d’état attempted by so small a body could not but fail.”[^[93]]

Although the Annapolis convention was ostensibly concerned with commercial regulation primarily, there is no doubt that it was the creation of the men who had been working in Congress and out for a general revision of the whole system. There is no doubt also that it was not regarded as of much significance in itself, but rather as a preliminary to a national convention which would afford an opportunity for reconstructing the government. For this view we have a witness of high authority, James Madison, who in a letter of August 12, 1786, to Jefferson, written a month before the Annapolis conference, said: “Many gentlemen, both within and without Congress, wish to make this meeting subservient to a plenipotentiary Convention for amending the Confederation. Tho’ my wishes are in favor of such an event, yet I despair so much of its accomplishment at the present crisis that I do not extend my views beyond a commercial Reform.”[^[94]]

Under the influence of Hamilton, the conference at Annapolis contented itself with merely recommending that another convention be called “to devise such further provisions as shall appear to them necessary to render the constitution of the federal government adequate to the exigencies of the Union.” Acting on this modest suggestion, Congress, in February, 1787, invited the states to send delegates to a Convention at Philadelphia for “the sole and express purpose of revising the Articles of Confederation.”

Certain tentative conclusions emerge at this point.

Large and important groups of economic interests were adversely affected by the system of government under the Articles of Confederation, namely, those of public securities, shipping and manufacturing, money at interest; in short, capital as opposed to land.

The representatives of these important interests attempted through the regular legal channels to secure amendments to the Articles of Confederation which would safeguard their rights in the future, particularly those of the public creditors.

Having failed to realize their great purposes through the regular means, the leaders in the movement set to work to secure by a circuitous route the assembling of a Convention to “revise” the Articles of Confederation with the hope of obtaining, outside of the existing legal framework, the adoption of a revolutionary programme.

Ostensibly, however, the formal plan of approval by Congress and the state legislatures was to be preserved.

CHAPTER IV
PROPERTY SAFEGUARDS IN THE ELECTION OF DELEGATES

Under the protection afforded by these outward signs of regularity, the leaders in the movement for the new Constitution set to work in their respective legislatures to secure the choice of delegates prepared to take the heroic measures which the circumstances demanded. The zealous and dynamic element, of course, was favored by the inertness, ignorance, and indifference of the masses, and the confidence of the legislatures in their ability to exercise the ultimate control through the ratifying power. No special popular elections were called to complicate the problem of securing the right kind of a Convention and the leaders were confronted with the comparatively simple task of convincing the legislatures of the advisability of sending delegates. Naturally the most strenuous and interested advocates of change came forward as candidates.

The resolution of the Congress under the Articles of Confederation calling for the Convention provided that the delegates should be “appointed by the states.” The actual selection was made in each case by the legislature, both houses participating, except in Georgia and Pennsylvania, which had unicameral assemblies. That is, the delegates to the federal Convention were selected in the same fashion as were United States Senators under the present Constitution, in all states, previous to the adoption of the principle of direct election. This fact in itself removed the choice of delegates one degree from the electorate.

A further safeguard against the injection of too much popular feeling into the choice of delegates to the Convention was afforded by the property qualifications generally placed on voters and members of the legislatures by the state constitutions and laws in force in 1787.[^[95]] In order to ascertain the precise character of the defence afforded to property by this barrier to universal manhood suffrage, it is necessary to inquire in detail into the qualifications then imposed.[^[96]]

The New Hampshire constitution of 1784 was in force when the call for the election of delegates came. It provided that “no person shall be capable of being elected a senator who is not of the Protestant religion, and seized of a freehold estate in his own right of the value of two hundred pounds.”[^[97]] Members of the lower house were required to possess an estate “of the value of one hundred pounds, one-half of which to be a freehold.” The suffrage was widely extended, for freeholders, tax payers, and even those who paid a poll tax could vote.

Massachusetts conferred the suffrage upon all males possessing a freehold estate of the annual income of three pounds, or any estate of the value of sixty pounds. A senator was required to be “seized in his own right of a freehold within this commonwealth, of the value of three hundred pounds at least, or possessed of a personal estate of the value of six hundred pounds at least, or of both to the amount of the same sum.” Every member of the house of representatives was required to be “seized in his own right of a free hold of the value of one hundred pounds, within the town he shall be chosen to represent, or any ratable estate to the value of two hundred pounds; and he shall cease to represent the said town immediately on his ceasing to be qualified as aforesaid.”

Like the neighboring state of Rhode Island, which sent no delegates to Philadelphia, Connecticut had continued after the Revolution under the old royal charter form of government without taking the trouble to draft a constitution. Under this old system, the suffrage was restricted to holders of real or personal property of a certain value. According to McKinley, “The forty-shilling freehold, translated later into seven dollars income from land, was retained as one of the alternative qualifications of the suffrage until the amendment in 1845 of the constitution of 1818.”[^[98]] The alternative qualification here spoken of was the ownership of forty pounds’ worth of personal property, which was established in 1702 and remained until after the Revolution. The Connecticut Register of the time thus quaintly describes the franchise: “The qualifications for freemen are that they be at least twenty-one years of age, possessed of freehold estate to the value of 40s. per ann. or £40 personal estate in the general list of estates in that year wherein they desire to be admitted Freemen; or are possessed of estate as aforesaid and by law excused from putting it into the list; and being of quiet and peaceable behaviour.”[^[99]]

New York gave a special position to the rights of property in the senate. Senators were required to be freeholders, and were chosen by freeholders “possessed of freeholds of the value of one hundred pounds.” With regard to the voter for members of the lower house, it was stipulated that “he shall have been a freeholder, possessing a freehold of the value of twenty pounds within said county, or have rented a tenement therein of the yearly value of forty shillings, and been rated and actually paid taxes to this state.” An exception to this rule conferred the suffrage on all who were freemen in Albany, and in New York City, on or before October 14, 1775.

These qualifications worked an extensive disfranchisement in New York. “The census of 1790 shows that out of a population of thirty thousand [in New York City], there were but 1,209 freeholders of £100 valuation or over; 1,221 of £20, and 2,661 ‘forty-shilling’ freeholders. Property interests—something like a landed aristocracy—controlled municipal elections.”[^[100]] Some notion of the extent to which the adult males would have voted if permitted, is afforded by the elections of 1788, at which members of the state ratifying convention were chosen under the universal manhood suffrage rule,[^[101]] and members of the assembly were chosen under the regular property qualifications. For example, Richard Harrison received 2677 votes as member of the convention, and 1500 votes as member of the state assembly.[^[102]] In Albany county the vote for members of the assembly ran about 1600 under that for members of the convention.[^[103]] It looks as if one could safely guess that about one-third more voters would have been active participants in elections if they had not been shut out by the prevailing property qualifications in New York.

New Jersey had a legislature of two houses, a council and a general assembly. Every member of the former had to be a freeholder and “worth at least one thousand pound proclamation money, or real and personal estate within the same county;” and every member of the latter body was required to possess at least half as much in real and personal property. As for the suffrage, the constitution provided “that all inhabitants of this colony, of full age, who are worth fifty pounds proclamation money clear estate in the same ... shall be entitled to vote for Representatives in Council and Assembly.”

The Delaware constitution of 1776 provided that members of both branches of the legislature should be chosen from among the freeholders of the county, and that “the right of suffrage in the election of members for both houses shall remain as exercised by law at present.” The election law which then governed the suffrage in Delaware was the act of 1734 which enfranchised freeholders owning “fifty acres of land, with twelve acres cleared and improved, or otherwise worth £40 lawful money.”[^[104]]

The first constitution of Pennsylvania established in 1776 was the work of a radical party, and it provided for a single chambered legislature based on a widely extended suffrage. “Every freeman of the full age of twenty-one years,” runs the instrument, “having resided in this state for the space of one whole year ... and paid public taxes during that time, shall enjoy the right of an elector: Provided always that sons of freeholders of the age of twenty-one years shall be entitled to vote although they have not paid taxes.”[^[105]]

In Maryland a distinction was made between town and county in the choice of delegates to the lower house of the state legislature. Generally every freeman “having a freehold of fifty acres of land,” or “having property in this state above the value of thirty pounds current money” could vote in the county in which he resided for members of the house of delegates. All persons qualified by the charter of Annapolis to vote for burgesses could vote for delegates from that city; and in Baltimore persons “having the same qualifications as electors in the county” could vote for delegates. County delegates in the state legislature were required to possess “real or personal property above the value of five hundred pounds current money.” The senators were chosen indirectly by electors selected by the qualified voters for delegates. These senatorial electors were to possess the qualifications of delegates, and senators themselves had to possess “real and personal property above the value of one thousand pounds current money.”

The Virginia constitution of 1776 stipulated that members of both houses of the legislature must be “freeholders or duly qualified according to law;” and added that “the right of suffrage in the election of members of both houses shall remain as exercised at present.” Under this provision, persons owning twenty-five acres of improved land or fifty acres of unimproved land were admitted to the suffrage, “together with certain artisans residing in Norfolk and Williamsburg.”[^[106]]

At the time of choosing delegates to the Convention, North Carolina was under the constitution of 1776 which prescribed property qualifications for members of the legislature and for voters as well. Each member of the senate was required to possess “not less than three hundred acres of land in fee,” and each member of the lower house “not less than one hundred acres of land in fee or for the term of his own life.” A freehold qualification of fifty acres of land was required of voters for senators, and the suffrage for voters for members of the lower house was extended to all freemen who paid “public taxes.” In the towns entitled to representation the possession of a freehold or the payment of a public tax qualified for voting in the election of members of the lower house.

The legislature of South Carolina, that chose the representatives of that state to the Philadelphia Convention, was elected under the constitution of 1778 which prescribed high property qualifications.[^[107]] “No person who resides in the parish for which he is elected shall take his seat in the senate, unless he possess a settled estate and freehold in his own right in the said parish or district of the value of two thousand pounds currency at least, clear of debt.” Non-resident senators were required to be the holders of such an estate worth at least seven thousand pounds, clear of debt. The member of the lower house was required to possess an estate and slaves or realty worth one thousand pounds,[^[108]] while each non-resident member of that house had to own a freehold estate worth at least three thousand five hundred pounds, clear of debt. The suffrage was restricted to persons owning fifty acres, or a town lot, or paying taxes equivalent to the taxes on fifty acres of land.

In 1787, the Georgia legislature consisted of one chamber, under the constitution of 1777, which stipulated that members of the house of representatives “Shall be of the Protestant religion, and of the age of twenty-one years, and shall be possessed in their own rights of two hundred and fifty acres of land or some property to the amount of two hundred and fifty pounds.” The suffrage was widely extended to every white male having in his own right property “of ten pounds value and liable to pay tax” or “being of any mechanic trade.”

From this review it is apparent that a majority of the states placed direct property qualifications on the voters, and the other states eliminated practically all who were not taxpayers. Special safeguards for property were secured in the qualifications imposed on members of the legislatures in New Hampshire, Massachusetts, New York, New Jersey, Maryland, North Carolina, South Carolina, and Georgia. Further safeguards were added by the qualifications imposed in the case of senators in New Hampshire, Massachusetts, New Jersey, New York, Maryland, North Carolina, and South Carolina.

While these qualifications operated to exclude a large portion of the adult males from participating in elections, the wide distribution of real property created an extensive electorate and in most rural regions gave the legislatures a broad popular basis.[^[109]] Far from rendering to personal property that defence which was necessary to the full realization of its rights, these qualifications for electors admitted to the suffrage its most dangerous antagonists: the small farmers and many of the debtors who were the most active in all attempts to depreciate personalty by legislation. Madison with his usual acumen saw the inadequacy of such defence and pointed out in the Convention that the really serious assaults on property (having in mind of course, personalty) had come from the “freeholders.”[^[110]]

Nevertheless, in the election of delegates to the Convention, the representatives of personalty in the legislatures were able by the sheer weight of their combined intelligence and economic power to secure delegates from the urban centres or allied with their interests. Happily for them, all the legislatures which they had to convince had not been elected on the issue of choosing delegates to a national Convention, and did not come from a populace stirred up on that question.[^[111]] The call for the Convention went forth on February 21, 1787, from Congress, and within a few months all the legislatures, except that of Rhode Island, had responded. Thus the heated popular discussion usually incident to such a momentous political undertaking was largely avoided, and an orderly and temperate procedure in the selection of delegates was rendered possible.

CHAPTER V
THE ECONOMIC INTERESTS OF THE MEMBERS OF THE CONVENTION

Having shown that four groups of property rights were adversely affected by the government under the Articles of Confederation, and that economic motives were behind the movement for a reconstruction of the system, it is now necessary to inquire whether the members of the Convention which drafted the Constitution represented in their own property affiliations any or all of these groups. In other words, did the men who formulated the fundamental law of the land possess the kinds of property which were immediately and directly increased in value or made more secure by the results of their labors at Philadelphia? Did they have money at interest? Did they own public securities? Did they hold western lands for appreciation? Were they interested in shipping and manufactures?

The purpose of such an inquiry is not, of course, to show that the Constitution was made for the personal benefit of the members of the Convention. Far from it. Neither is it of any moment to discover how many hundred thousand dollars accrued to them as a result of the foundation of the new government. The only point here considered is: Did they represent distinct groups whose economic interests they understood and felt in concrete, definite form through their own personal experience with identical property rights, or were they working merely under the guidance of abstract principles of political science?

Unfortunately, the materials for such a study are very scanty, because the average biographer usually considers as negligible the processes by which his hero gained his livelihood. The pages which follow are, therefore, more an evidence of what ought to be done than a record of results actually accomplished. They would be meagre, indeed, were it not for the rich unpublished records of the Treasury Department which are here used for the first time in this connection; and they would doubtless have been fuller were it not for the fact that most of the books showing the central operations of the Treasury Department under Hamilton have disappeared. The names of the attending members of the Convention are given in alphabetical order.

Of Abraham Baldwin’s private fortune there is little known. His father was evidently well-to-do, for he enjoyed the advantage of a classical education at Yale before he established himself in the practice of law at Savannah, Georgia. He soon rose to eminence in his profession, and was reckoned among the ablest and shrewdest lawyers of his adopted commonwealth. A short sketch of him states that by “his constant habits of economy and temperance,” he accumulated enough to enable him to assist many young men in their education and establishment in business. When his father died, in 1787, he was able to pay the debts of the insolvent estate, and he educated his six half brothers and sisters “in a great measure at his own expense.”[^[112]]

Some portion of Baldwin’s fortune was invested in public securities. He possessed a few thousand dollars worth of the stocks of the new government at its very inception, which doubtless represented old paper of the Confederation acquired by original subscription or by purchase. The ledgers and other principal records of Georgia are apparently unavailable—at all events a search at the Treasury Department failed to reveal them; but Baldwin held some paper which is entered on the books of his native state, Connecticut, in April, 1792: deferred 6 per cents, funded 6 per cents, and 3 per cents to the amount of about $2500.[^[113]]

At later dates, 1797 and 1804, he appears on the Treasury Records for several thousand dollars worth of 6 per cents and 3 per cents, but the sources of these sums are not apparent.[^[114]] It is probable, however, that these stocks were paper which Baldwin funded at the Treasury instead of a loan office. He was a member of Congress, and naturally would have transacted business with the agency nearest at hand. They may, of course, represent purchases for investment, made after the great appreciation had taken place.[^[115]]

There is no exhaustive biography of Richard Bassett, of Delaware. A brief sketch of him relates that he “was born in 1745. He was the adopted son of Mr. Lawson, a lawyer, who married a Miss Inzer. The Inzer family was Herman’s heir to Bohemia Manor.... Mr. Bassett was educated and trained for the profession of law by Mr. Lawson, whose heir he became. By this inheritance he came into possession of six thousand acres of Bohemia manor, which we are informed, embraced the fairest and best portion of the Manor.”[^[116]] Through his inheritance and his accumulations in the practice of law, he became one of the wealthy men of his state. Another biographer notes that “His fortune was large and he entertained lavishly at his three homes in Wilmington, Dover, and at Bohemia Manor.”[^[117]] He was on intimate terms with the leading financial men of the community; he was very active in securing a charter in Delaware for the Bank of North America when it was attacked by the Pennsylvania legislature, and was warmly thanked for his success by President Willing, in a letter dated February 6, 1786.[^[118]]

Whether any considerable amount of Mr. Bassett’s large fortune was invested in public securities at the inception of the new government it is impossible to ascertain, on account of the meagre records of the state of Delaware preserved in the Treasury Department. In the later documents of the central office of the Treasury there appears the remnant of “an old account” to the amount of a few hundred dollars worth of 3 per cents and 6 per cents under dates of 1796 and 1797.[^[119]] A reasonable inference from the entry would be that Bassett, like other members of Congress, carried on his transactions directly with the Treasury (whose early records are missing), and that these holdings were based on paper originally funded.

Gunning Bedford, of Delaware, was the son of a “substantial land owner”[^[120]] and a Bedford of that name appears on the tax lists of Newcastle county for the year 1776 for the amount of sixteen pounds, a moderate sum for those days.[^[121]] He was a lawyer, but the extent of his practice is not known. He was of high standing in the community, and was elected governor of his state a few years after the Convention met. He took an interest in the financial affairs of the state, and under his administration as governor the Bank of Delaware was organized. How far Bedford had an interest in public securities cannot be determined on account of the fact that only a few scraps of the loan office papers for Delaware seem to be preserved in the Treasury Department. An old loan office volume shows a Gunning Bedford down for one $400 certificate of May, 1779[^[122]] and traces of the financial connections of the member of the Convention with the government are to be found in the Pennsylvania loan office records.[^[123]]

John Blair, of Virginia, was born in that state about 1731. He received a collegiate education, prepared for the law, and “in a very few years rose to the head of his profession.”[^[124]] Pierce, in his notes on the men of the Convention, says: “Mr. Blair is one of the most respectable men in Virginia, both on account of his Family as well as fortune. He is one of the Judges of the Supreme Court of Virginia, and acknowledged to have a very extensive knowledge of the Laws. Mr. Blair is however no orator, but his good sense and most excellent principles compensate for other deficiencies.”[^[125]]

Blair took advantage of the excellent opportunity afforded by the formation of the new Constitution to profit by the rise of securities. He appears frequently in the fiscal transactions between the federal government and the Virginia loan office, of which a few illustrations need be given here. In March, 1791, he presented £577:16:7 in Virginia certificates toward the United States loan; and of these securities £249 had been invested by Blair himself in 1782. The remaining amount he had purchased on his own account.[^[126]] In the same year an agent of Blair presented two small certificates which had evidently been purchased by the principal because they were issued to other parties in 1778.[^[127]] In September of that year, Blair himself turned in nearly $10,000 worth of paper on the United States loan, of which a part was purchased and a part original issues to the holder.[^[128]]

William Blount, of North Carolina, was the son of Jacob Blount who died in 1789, “leaving a large estate.”[^[129]] Of the younger Blount’s property interests in 1787 it is impossible to speak in detail. Very early after the establishment of the new government he was connected with land speculations on a large scale.[^[130]] In 1790 he was appointed by Washington to the post of governor of the Territory South of the Ohio and it seems that he did not consider the employment of public office for personal gain as incompatible with the discharge of his administrative duties. In July, 1797, President Adams sent a message to Congress asserting that there was a conspiracy in the southwest to wrest New Orleans and the Floridas from the King of Spain and transfer them to the English crown, and adding that Blount, who was then a Senator from Tennessee, was implicated in the plot. The United States Senate immediately took action, and after inquiry expelled him by a vote of twenty-five to one on the charge of “high misdemeanor inconsistent with public trust and duty.” When the sergeant-at-arms went to arrest him and take him to Philadelphia for trial he refused to go; and in his refusal he was warmly supported by his friends, of whom he had a legion, for, as his biographer remarks, “He was a man of commanding presence, courtly yet simple manners, and having a large salary and large private means, he entertained lavishly at his house.”[^[131]]

It does not appear that Blount combined dealings in securities with speculations in land, for the loan office of North Carolina credits him with only a small holding, and the origin of that is not apparent.[^[132]] It is true that the records of that state are incomplete, but Blount’s appointment to the western post at the beginning of Washington’s administration must have precluded extensive operations in securities.

David Brearley, of New Jersey, was the grandson of John Brearley, who “owned 1600 acres of land near Newton, N. J. ... a hundred acre plantation on the Delaware ... besides several thousand acres of land near Lawrenceville.”[^[133]] A brief sketch of him states that he “received the honors of Princeton at the age of eighteen. On leaving that celebrated seminary, he commenced the study of law, and in a few years stood foremost at the bar of his native state.”[^[134]] In 1779 he was appointed chief justice of New Jersey, a post which he held until 1789 when he resigned to accept a position as judge of the United States district court of that state.[^[135]]

Brearley died in the summer of 1790 and consequently could not have established any fiscal relations with the new government. The incompleteness of the early loan office records for New Jersey, preserved in the Treasury Department, renders impossible a positive statement concerning Brearley’s holdings of securities at the time of the Convention. Only one small entry appears in his name for a few hundred dollars in a certificate purchased in 1779;[^[136]] his relatives, however, appear frequently on the loan office books of his state; but their aggregate holdings were small. Joseph Brearley’s name occurs several times, for example in July, 1791, for $505.80 worth of 3 per cents;[^[137]] David Brearley had a son and a brother bearing that name.[^[138]] Elizabeth Brearley is also among the small holders, and the Chief Justice’s first and second wife and a daughter bore that name.[^[139]] The name of Zerujah Brearley—a sister of the member of the Convention[^[140]]—also appears.

Jacob Broom, of Delaware, was born at Wilmington, in 1752. His father “originally a blacksmith was regarded as one of ‘the gentry’ of the day, and was ‘a man of considerable substance, in real estate, silver, and gold,’ although not one of the very wealthiest of his class. ‘Class’ distinctions, arising from birth, education, and worldly possessions were not wholly ignored at that time by those who came to this land, to find a home, a sanctuary, and liberty. And so in the transactions of the period we find James Broom, Jacob’s father, referred to as James Broom, Gentleman; and Jacob Broom as Surveyor. And both of these men had lands and houses to rent and sell and gold and silver to loan on good security. And both of them sold and rented and loaned.”[^[141]]

Broom was a man of diversified financial resources. He was interested in cotton mills and other enterprises. He was one of the original stockholders of the Insurance Company of North America organized at Philadelphia in 1792.[^[142]] He was also one of the organizers and original stockholders of the Delaware Bank established under Bedford’s administration.[^[143]] As mentioned above, the fragmentary records of Delaware in the Treasury Department throw little light on the public security holders of that state at the time of the formation of the Constitution; but the ledgers of the central Treasury show that Broom was a holder of a small amount of 3 per cents in 1797 and that this was a remnant of an older account.[^[144]] Broom was also willing to serve the new government in an official capacity, for he applied to Madison in April, 1789, for an appointment as collector at Wilmington.[^[145]]

Pierce Butler, of South Carolina, was a descendant of the Duke of Ormond and was very vain of his noble birth.[^[146]] William Pierce in his notes on the members of the Convention records that Butler “is a gentleman of fortune and takes rank among the first in South Carolina.”[^[147]] He was a large slave-holder, having thirty-one in his possession at the time of the first census. He also possessed some public securities, for he was a stockholder and director of the first United States Bank, and must have purchased his shares on the same basis as other stockholders, that is, by the exchange of securities. He does not appear on the records of South Carolina, however, but his daughter, Sarah, had in 1792 a small amount of the assumed debt.[^[148]]

Daniel Carroll, of Maryland, is recorded by his contemporary, Pierce, as “a man of large fortune and influence in his state.”[^[149]] His interests were wide and varied. He was a stockholder in the Potomac Company;[^[150]] and he favored the adoption of a protective tariff, for he was among the signers of the petition for such a measure laid before the first Congress under the new Constitution.[^[151]] He was a holder of public securities, for his name occurs frequently in the Treasury records of the period.[^[152]] His chief source of profit out of the new system was however in the location of the capitol at Washington, on land which he owned.[^[153]] Incidentally, he was able to facilitate this last transaction, for he was a member of the Congress of 1789–1791 and was one of the commissioners appointed to lay out the District of Columbia.

George Clymer, of Pennsylvania, was the son of “a wellto-do merchant and ship builder of Philadelphia” who had augmented his fortunes by marrying the daughter of a fellow merchant of the same city.[^[154]] On the early death of his parents he was placed under the guardianship of William Coleman, one of the first business men of his native city, whose counting house he entered to learn all the arts of mercantile pursuits and “the principal part of whose fortune he inherited.”[^[155]] Clymer’s personal fortune was further enhanced by a happy marriage to Elizabeth Meredith, the daughter of Reese Meredith, “one of the principal merchants of Philadelphia.”[^[156]] He was thus a brother-in-law of Mr. Meredith the first treasurer of the Union, also a man of “large fortune.”[^[157]] For some time Clymer was associated in business with his father- and brother-in-law.[^[158]]

Mr. Clymer’s intimate associations were therefore merchantile and financial, and his large fortune and quick understanding of the needs of trade and commerce made him one of the first men of his city in the Revolution and gave him a wide influence during the critical period, the formation of the Constitution, and the establishment of the new government, which he served as a member of Congress and later in several official capacities.

In all financial matters he took a deep interest. He helped to create the temporary Bank of Pennsylvania in 1780, and subscribed £5000 to its capital stock. When the Bank of North America was organized he became one of the directors and later was president of the Philadelphia Bank.[^[159]]

Clymer turned his extensive financial experience to some account in handling the securities of the new government which he had been instrumental in framing, for he is recorded in the Pennsylvania books as holding, in August, 1791, over $3000 worth of 3 per cent securities.[^[160]] If he held sixes deferred and funded, as may be assumed, although the incomplete records apparently do not permit of a verification or denial of this, he had in all over $10,000 worth of the government paper.

Wm. R. Davie, of North Carolina, was born in England in 1756 and was brought to America in 1763 by his father, who left him in care of his maternal uncle, William Richardson, a Presbyterian clergyman, who took charge of his education and on his death bequeathed to him his estate.[^[161]] Davie chose the profession of law, and by a lucrative practice “he quickly accumulated a large estate.”[^[162]] He was of counsel in the famous case of Bayard v. Singleton, and he had the satisfaction of securing from the court an opinion declaring an act of the state legislature unconstitutional.[^[163]] He held a fine plantation at Tivoli and at his death left a considerable estate which was the subject of litigation as late as 1892 in the Supreme Court of the United States. His personal property certainly was not small for he was able to pay $5000 for a thorough-bred colt.[^[164]] His connections with the landed proprietors of his region were intimate and extensive and he is reported to have drawn all the wills made during his time in that part of the state.[^[165]]

Jonathan Dayton, of New Jersey, was associated with, and agent for, John Cleves Symmes, in the purchase of an enormous tract of land in Ohio in July and October, 1787, the year of the Convention (formally consummated in 1788), and before the ensealing of the contract Symmes and his associates had paid into the Treasury $82,198 “one seventh in military rights and the residue in the public securities of the United States.” The remainder was to be paid in gold or silver or the securities of the United States, and part (one seventh) in military rights. In 1792 Symmes and Dayton complained that on account of the “advanced price of certificates,” they must have easier terms. It is apparent from this record,[^[166]] that they were engaged in buying up military certificates and government securities about the time of the meeting of the Convention.

Afterward, by collusion with Ludlow, the official surveyor, and the inadvertence of Hamilton, Secretary of the Treasury, Symmes, Dayton, and associates secured “the advantage of paying almost two-sevenths of their contract and above one-half of their actual payments in military warrants of one acre for an acre and a half of the supposed million, instead of one-seventh part of the actual payments” at a loss to the United States of more than $30,000.[^[167]] In March and April, 1800, Dayton purchased about 15,000 acres of public lands with military certificates.[^[168]]

If further evidence were needed that Dayton was speculating vigorously in government securities and military certificates, it is to be found in a suit brought by him and his partner, Lawrence, against Childs, a member of their concern in 1800, which was carried before Chancellor Livingston and later withdrawn. In this case Childs exhibited sixteen letters from Dayton, showing that while the latter was Speaker of the House of Representatives he had been engaged in speculations in public land warrants. Dayton was not unaware of the improper character of such transactions, for in a letter of April 17, 1796, he wrote to Childs: “The contents of this letter are of such a nature as to render it improper to be seen by any except yourself; burn it therefore, when you have perused it.”[^[169]]

The conclusive evidence of Dayton’s extensive operations in public securities during the period of the establishment of the new government and his term of service as Speaker is afforded by the records of the Treasury Department. Here he appears so frequently on the books of the loan offices of several states that some pages of this volume would be required to present the bare data of his transactions. However, a few examples of his dealings may be given by way of illustration. He appears on the loan office books of New York in February and March, 1791, for the following amounts: $17,060.82, $8530.40, $11,332.93, $7401.31, $3700.73, and $5100.61, totalling more than $50,000.[^[170]] At another point he is recorded for more than $15,000;[^[171]] and at another point for $6000.[^[172]] Although Woods is not celebrated for the painstaking impartiality of his famous History of Adams’ Administration, he is singularly accurate in one of his characterizations: “Jonathan Dayton, of New Jersey, the late speaker of Congress, is notorious from Boston to Georgia. The deeds of other members of Congress were scarcely known beyond the circle of their respective states, but the speculations of this man have rung throughout the western world.”[^[173]]

John Dickinson, of Delaware, was a member of one of the established landed families of the south. He was born in 1732, on a plantation in Talbot County, on the eastern shores of Maryland; and eight years after his birth, his father, Samuel Dickinson moved from Maryland to Delaware “where he purchased a large estate in Kent County, near Dover.”[^[174]] Dickinson was a student of law in the Middle Temple and took up the practice of his profession in Philadelphia in 1757.[^[175]] Within five years he had acquired an extensive practice and won a respectable standing at the bar.

If his personal fortunes, however, had not been sufficient to assure him a satisfactory position in the business and professional world at Philadelphia, his marriage into one of the first and wealthiest commercial families would have more than made up for his deficiencies.

In 1770 he married Mary Norris, and for a time lived at the family estate, Fairhill, one of the show places of the day: “This house,” says Simpson,[^[176]] “was in its day a very grand mansion and a place of great celebrity, with a large front of sixty feet. It was surrounded by forest and evergreen trees of majestic growth and well-arranged shrubbery. It commanded a beautiful prospect of the city, with a distant view of the Delaware.... The mansion was two stories high and most substantially built, with a very wide hall running through its centre. The library was papered, but the parlors and hall were wainscotted with oak and red cedar unpainted, but polished with wax and kept in bright and handsome order by constant rubbing. The carriage way was finely graduated and wound through an extensive lawn, from its approach on the Germantown road which was bordered with shrubbery. The pleasure grounds, lawn, green house, and gardens, fish-ponds, and walks, embraced a large area of several acres in extent.” It is true the vast estates bequeathed to Miss Norris by her father were transferred to collateral male heirs in order to preserve the family holding and name, but she retained the “considerable personal property” which her father left to her.[^[177]] Dickinson was able to make a large gift to Dickinson College, named in his honor; and he and his wife were widely celebrated for their extensive benefactions.[^[178]]

The meagreness of the Treasury records for Delaware make it impossible to determine whether Dickinson was engaged in fiscal operations along with his intimate friends, Robert Morris, Thomas Willing, George Clymer, and other prominent Philadelphia men of affairs. It is possible that he was not largely engaged in the public security transactions,[^[179]] for he was an extremely cautious man in finances, and had got into serious discredit with the patriot party during the Revolution, because it was rumored that he had advised his brother against accepting the payment of debts in paper which was sure to depreciate. He was also unhappily involved with Robert Morris to the amount of £7000 at the time of the latter’s embarrassment, and may not have wished to incur further risks.[^[180]]

Oliver Ellsworth, of Connecticut, was the son of a clever Connecticut farmer who inherited a hundred pounds and “had the industry and the shrewdness to accumulate a considerable estate and to win the reputation of an excellent farmer.”[^[181]] Oliver was educated at Yale and Princeton and became a lawyer in spite of his father’s determination to force him into the ministry. Though he was almost briefless during the early days of his practice, he had the good fortune to wed the daughter of William Wolcott, of East Windsor, “a gentleman of substance and distinction.”[^[182]] He is described by his biographer as a man of great purpose, persistency, and of little imagination, and he rose rapidly to wealth and power at the bar of his native state. “It is doubtful,” says Brown, “if in the entire history of the Connecticut bar any other lawyer has ever in so short a time accumulated so great a practice.... Measured either by the amount of his business or by his earnings, it was unrivalled in his own day and unexampled in the history of the colony. Naturally shrewd, and with nothing of the spendthrift in his nature, he quickly earned a competence, and by good management he increased it to a fortune which for the times and the country was quite uncommonly large. From a few documents still in existence it is clear that he became something of a capitalist and investor. He bought lands and houses and loaned out money at interest. He was a stockholder in the Hartford Bank and one of the original subscribers to the stock of the old Hartford Broadcloth Mill (1788).”

With that natural shrewdness and economy which his latest biographer ascribed to him, Ellsworth accumulated a by no means negligible amount in public securities from which he profited by the rise of credit that accompanied the establishment of the new government. He was among the first citizens of Connecticut to have his paper funded into the new government securities, for he appears in December, 1791, with $1330.50 in deferred sixes, $2660.98 in funded sixes, and $1995.75 in 3 per cents.[^[183]] His wife, Abigail, and other members of her family, the Wolcotts, had also invested in securities.[^[184]]

William Few, of Georgia, was almost unique among the members of the Convention in being a representative, in origin and education, of the small farming class. His father was a Maryland farmer who was led by a successive failure of crops to try his fortune in North Carolina, where young Few labored with the ax and plow. Even here the elder Few did not prosper, and he became so deeply involved in debt that his son had to take over the management of his property. William, afterward, in 1776, settled in Georgia, and soon became engaged in politics and the Revolutionary War.

At the close of the War, he relates, “I possessed not much property nor had I any expectation that I did not acquire by my own industry. I therefore determined to commence the practice of law, although I had never spent one hour in the office of an attorney to prepare for business, nor did I know anything of the practice.” He adds, however, that his practice grew in spite of his deficiencies and that his “pecuniary prospects were very flattering,” by the time he was elected a member of the Convention. At all events he acquired a plantation in Columbia County, and after the expiration of his term as Senator in 1793, he retired there and engaged in agricultural pursuits. In 1799 he left Georgia for New York, where he managed his small fortune in real and personal property, according to his own estimate, about $100,000.[^[185]]

Few’s personal interest in the new government was probably rather small, but the absence of the full records of Georgia from the books of the Treasury Department renders impossible a categorical statement. He was connected with the Georgia Union Company, which was involved in the Yazoo land deals;[^[186]] and he presented for funding a certificate of the issue of 1779 to the amount of $2170 nominal value, which he had secured from one Spears.[^[187]] His name appears occasionally on other records for small amounts, and the index in the office of the Register of the Treasury cites him as being among the security holders recorded in a volume not found.[^[188]]

Thomas Fitzsimons, of Pennsylvania, was intimately identified with the mercantile interests of his city. He is described as “an extensive merchant,” and his family connections were with people engaged in his own line. He married the daughter of Robert Meade, and established business relations with his brother-in-law “who was one of the prominent merchants and shipowners of Philadelphia.”[^[189]] It is recorded of him that “His influence in the country and especially among merchants was second to none.... Mr. Fitzsimons was one of those efficient and able men who laid the foundations of the commercial and financial systems of the United States.”[^[190]] It is not surprising to find that he was also a “conspicuous advocate of a protective tariff.”[^[191]]

Like his prominent associates in Philadelphia, Mr. Fitzsimons combined mercantile and financial operations. He was “for a long time a director in the Bank of North America and President of the Insurance Company of North America, in which latter office he continued until his death.”[^[192]] Indeed he was so extensively involved in the speculations of Robert Morris that his resources were seriously crippled by the failure of that gentleman.[^[193]]

His intimate knowledge of finance and his immediate business connections doubtless invited him to deal in public securities; and Maclay sets him down among the speculators as follows: “The Speaker gives me this day his opinion that Mr. Fitzsimons was concerned in this business [of speculating] as well as Mr. Morris, and that they stayed away (from Congress) for the double purpose of pursuing their speculation and remaining unsuspected.”[^[194]] It is probable that Maclay’s version is correct, for in 1791 Fitzsimon’s agent, Michael Conner, presented for him certificates of 1778 to the amount of nearly $12,000 nominal value which he had evidently bought up.[^[195]] He appears also on the records of the 6 per cents and the threes for small amounts, and his operations extended beyond his native state.[^[196]]

Fitzsimons was also involved extensively in land speculations with Robert Morris, for the latter in a letter of October 9, 1795, writes to James Marshall, their European agent, to the effect that Fitzsimons and he had put on sale in London “about 360,000 acres of land situated in Georgia.”[^[197]] But as pointed out above Fitzsimons’ relations with Morris cost him dearly and snatched away from him all that he had made in public securities and more besides.

Benjamin Franklin, of Pennsylvania, in the midst of his varied activities as printer, diplomat, statesman, and philosopher, managed withal by thrift and investments to accumulate a considerable fortune for his day, about $150,000.[^[198]] At his great age on the assembling of the Convention, it would hardly have been practicable for him to have engaged in investments in public securities had he been so inclined; and he died in 1790, before the funding system went into effect. A short time before his death, however, he was interested in land speculations;[^[199]] and in his will he bequeaths “lands near the Ohio” and three thousand acres granted by the State of Georgia to him.[^[200]] He does not appear to have held any public paper.

Nicholas Gilman, of New Hampshire, was in public life from his youth until his death. He entered the army at the age of twenty-one, and after the War he served in Congress and in other public positions. He does not seem to have been a man of much weight either in private life or the Convention. A French observer remarks of his election as a member of the Federal Convention: “Cette circonstance prouve qu’il n’y a pas un grand choix à faire dans cet Etat, ou que du moins les hommes des plus sensés et les plus habiles ne sont pas assés riches pour accepter une place publique.”[^[201]]

In financial matters, there was no doubt of Gilman’s ability. He managed to accumulate a considerable amount of public securities before the meeting of the Convention, and apparently added to his holdings later. In the Nicholas Gilman papers preserved in the Library of Congress there is a list of certificates of the liquidated debt to the amount of $5400.67, declared to be the property of Nicholas Gilman, on December 9, 1786. This paper was bought up by Gilman, for the list of original holders is given. A receipt bearing the date of June 29, 1787, preserved in the above papers, shows Nicholas Gilman to have received interest on $6654.79 of the public debt. He and the various members of the Gilman family of New Hampshire were extensively engaged in transactions in public securities.[^[202]] One entry in the Treasury books of the new government shows Nicholas Gilman to have $11,021.95 worth of 6 per cent Deferred Stock;[^[203]] and he supplemented his purely fiscal operations by dealing in military certificates (that is, soldier’s paper which could be bought from necessitous holders at a fraction of its value), and in public lands.[^[204]]

While Gilman was quick to look after his own interests, his devotion to his native state made him anxious for her towns to participate in the general prosperity enjoyed by holders of public securities after the formation of the Constitution. On September 3, 1787, he had already discovered the probable effect of the proposed Constitution, not yet ready to lay before the people, upon the securities of the government. On that day he wrote to the President of New Hampshire advising the towns to buy up public securities at the prevailing low price in order to have paper to transfer to the federal government in lieu of taxes and other charges. He says: “I find many of the states are making provision to buy in their quota’s of the final settlements, and I must ardently wish that the towns in New Hampshire may be so far awake to a sense of their interest as to part with their property freely in order to purchase their several quota’s of the public securities now in circulation, while they are to be had at the present low rate; which is in this place, at two shillings and six pence on the pound. If they suffer the present opportunity to pass and we should be so fortunate as to have an efficient Government, they will be obliged to buy them of brokers, hawkers, speculators, and jockeys at six or perhaps eight times their present value.”[^[205]]

Elbridge Gerry, of Massachusetts, was born in Marblehead in 1744. His father was a merchant of good standing and comfortable estate. His biographer states that after his graduation from Harvard, Elbridge “turned his attention to that line of life in which his father’s prosperity seemed to hold out the greatest inducements to a young and enterprising mind; and he plunged at once into the most active pursuits of commerce. His fairness, correctness, and assiduity, and the extensive knowledge of commercial concerns which he acquired from his father’s experience and his own exertions were crowned with good fortune, and while yet young in business and in years he acquired a considerable estate and a very high standing at Marblehead.”[^[206]]

As a merchant, Gerry was closely in touch with the needs of commerce, and was deeply impressed with the necessity for national resistance to the discriminations of Great Britain. In April, 1784, he presented a report to Congress in which he called attention to the fact that Great Britain had adopted regulations destructive to American commerce in the West India Islands, and that these measures of discrimination were growing into a system. “Unless the United States in Congress assembled,” he urged, “shall be vested with powers competent to the protection of commerce, they can never command reciprocal advantages in trade; and without these, our foreign commerce must decline and eventually be annihilated.” The West Indian trade affected New England particularly, and Gerry is thus reflecting a local interest in demanding a national system of commercial protection.[^[207]]

In addition to his mercantile interests, Gerry was concerned in financial affairs. In the Convention he strongly urged inserting in the Constitution a clause conferring on the new government not only the power but also the obligation to provide fully for the holders of public securities. According to Madison’s notes, “Mr. Gerry considered giving the power only, without adopting the obligation, as destroying the security now enjoyed by the public creditors of the United States. He enlarged on the merit of this class of citizens, and the solemn faith which had been pledged under the existing Confederation.”[^[208]] Later in the Convention, when Colonel Mason objected to making the full discharge of the debt obligatory, Gerry again took exceptions. He said, “that for himself he had no interest in the question, being not possessed of more of the securities than would by the interest pay his taxes. He would observe, however, that as the public had received the value of the literal amount, they ought to pay that value to somebody. The frauds on the soldiers ought to have been foreseen. These poor and ignorant people could not but part with their securities. There are other creditors who will part with anything rather than be cheated out of the capital of their advances.... If the public faith would admit, of which he was not clear, he would not object to a revision of the debt so far as to compel restitution to the ignorant and distressed who had been defrauded. As to the Stock-jobbers he saw no reason for the censures thrown on them. They kept up the value of the paper. Without them there would be no market.”[^[209]]

Gerry here explains to his colleagues that he is a holder of securities; but he modestly underestimates the amount, or his taxes were rather high, for the loan office records of Massachusetts show that the interest on his securities, issued pursuant to the act of Congress of April 28, 1784, was about $3500 a year, an amount which, even at the prevailing rate of depreciation, would have covered the taxes on a considerable estate.[^[210]] The incompleteness of the records in the Treasury Department does not permit of an exact estimate of Gerry’s holdings; but they must have been large, for the following items appear to his credit: $14,266.89 on the Liquidated Debt Book of the Massachusetts loan office,[^[211]] $2648.50 worth of sixes and threes in 1790 on the Pennsylvania loan office books,[^[212]] $409.50 in threes on the Pennsylvania ledger under the date of December 13, 1790,[^[213]] and £3504:8:10 worth of old paper funded into federal securities in the Massachusetts loan office, August 24, 1791.[^[214]] There may be of course some duplication of amounts but there can be no doubt that Gerry’s interest income from confederate securities in one year shortly before the meeting of the Convention was about $3500, and also there can be no doubt that Gerry had bought largely with a view to speculation, for a very few of his certificates were issued to him originally. He had therefore more than an academic sympathy with the stockbrokers. Nevertheless, it should be noted that notwithstanding his large interests at stake, Gerry for several reasons strongly opposed the ratification of the Constitution.[^[215]]

However, Gerry during his entire public career seems to have intermixed his official relations with his private economic affairs. While he was a member of Congress, before the adoption of the Constitution, he became interested in the public lands. On March 1, 1785, Timothy Pickering,[^[216]] one of the leading land operators of the period, wrote to Gerry: “As you have expressed your wishes to be concerned in the purchase of lands on the other side of the Alleghany mountains thro’ our agency, we think it very material to your interest as well as our own that we be informed, if possible, what plan Congress will probably adopt in disposing of those lands which lie west of the Ohio. If they mean to permit adventurers to make a scramble ... it will behove us to engage seasonably with some enterprising, but confidential character, to explore the country and make locations.... If there must be a scramble, we have an equal right with others, and, therefore, the information desired in the beginning of this letter may be of essential importance. Your answer to this letter will much oblige your sincere friends who wish to advance your interest with their own.”[^[217]]

Gerry was then a member of Congress, which had under consideration the disposal of the western lands. If this land company, of course, could secure inside information, it would be advantageous to Mr. Gerry who contemplated speculating in those lands, as well as to Mr. Pickering’s agency.

Gerry undoubtedly took advantage of the opportunity to invest in western enterprises, for he was a share-holder in the Ohio Company, proprietors of lands on the Muskingum River[^[218]]—a concern in which he apparently became interested while a member of the Congress under the Articles of Confederation, during the organization of the Company and the procuring of the public grant.

Nathaniel Gorham, of Massachusetts, was a successful merchant at Charlestown, the place of his birth. He was prominent in the political life of his community, having served as a member of the legislature and the constitutional convention of his state.

In addition to his mercantile and political pursuits, Gorham engaged in land speculation on a large scale. In 1786, Massachusetts, by a compromise with New York, secured a large area of western country, and in April, 1788, “sold all this land to Nathaniel Gorham, of Charlestown, and Oliver Phelps, of Granville, for a million dollars, to be paid in three annual instalments in the scrip of Massachusetts, known as consolidated securities, which were then much below par.... Behind Phelps and Gorham there was a syndicate of persons who desired to speculate in the lands, but who, in order not to compete with each other, had united and allowed these two to act for all.”[^[219]]

Robert Morris was one of Gorham’s associates in this venture, and other prominent men were behind the project; but the projectors were unable to realize fully on their scheme, because the rise of Massachusetts scrip, after the adoption of the Constitution, made it impossible for them to fulfil the original terms of their contract. Consequently, they received only a portion of the original purchase.

The unhappy outcome of this venture apparently left Gorham without a very large fortune at his death in 1796. He does not seem to have combined any considerable transactions in continental securities with those in state scrip; although he was doubtless a holder in some amount because his will shows him to have been possessed of twenty shares in United States Bank stock.[^[220]] Inasmuch as holders of this paper secured it in exchange for old securities and some specie, it may be surmised that Gorham must have had some of the continental paper at the time of the establishment of the Bank, although it may be that he purchased the stock as an investment. The tangled state of his affairs at his death makes this latter conclusion improbable at least.

We have now come to the colossal genius of the new system, Alexander Hamilton. It is true, that he had little part in the formation of the Constitution, but it was his organizing ability that made it a real instrument bottomed on all the substantial interests of the time. It was he who saw most keenly the precise character of the social groups which would have to be rallied to the new government in order to draw support away from the states and give the federal system a firm foundation. He perceived that governments were not made out of thin air and abstract principles. He knew that the Constitution was designed to accomplish certain definite objects, affecting in its operation certain definite groups of property rights in society. He saw that these interests were at first inchoate, in process of organization, and he achieved the task of completing their consolidation and attaching them to the federal government.

He saw, in the first place, that the most easily consolidated and timorous group was composed of the creditors, the financiers, bankers, and money lenders. He perceived that they were concentrated in the towns and thus were easily drawn together. He saw that by identifying their interests with those of the new government, the latter would be secure; they would not desert the ship in which they were all afloat. It has been charged that he leaned always on the side of the financial interest against the public as represented in the government; but it must be remembered that at the time the new system went into effect, the public had no credit, and financiers were not willing to forego their gains and profits for an abstraction. It is charged against him that he did not buy up government paper in behalf of the public at the most favorable terms; but to have done so would have diminished the profits of the very financiers whose good will was necessary to the continuance of the government.

The second group of interests which Hamilton saw ready for organization were the merchants and manufacturers who wished protective tariffs. He would have been blind, indeed, if he had not discovered and interpreted the widespread movement for protection which was swiftly gathering headway during the years preceding the formation of the Constitution. He was not blind. His first report on manufactures show how keenly alive he was to the extent and diversity of the groups whose financial advantage lay in a system of protection. Whether this was for the good of the whole people need not be argued here. Hamilton’s relations were with the immediate beneficiaries. They were the men who were to throw their weight on the side of the new government. How persistently Hamilton sought to inform himself of the precise nature of the interests needing protection in the separate localities, from New Hampshire to Georgia, is evidenced by his unpublished correspondence with business men in all the commercial centres.[^[221]]

The third interest which Hamilton consolidated was composed of the land speculators and promoters and embraced all the leading men of the time—Washington, Franklin, Robert Morris, James Wilson, William Blount, and other men of eminence.[^[222]] This dealing in land was intimately connected with public securities, for a large portion of the lands were bought with land warrants purchased from the soldiers, and with other stocks bought on the open market at low prices. Hamilton saw clearly the connection of this interest with the new government, and his public land policies were directed especially to obtaining the support of this type of operators.[^[223]]

Without the conciliation and positive support of these powerful elements in American society, the new government could not have been founded or continued. With keen insight, Hamilton saw this. He made no attempt to conceal it; for whatever may have been his faults he did not add the crime of demogogy. It is true that in private he often expressed a contempt for popular rule which is absent from his public papers; but his public papers contain a plain statement of his policies, and show why he considered them necessary to the strength and stability of the government.

Thousands of small farmers and debtors and laboring mechanics were opposed to his policies, but they did not have the organization or consciousness of identity of interests which was necessary to give them weight in the councils of the new government. They were partly disfranchised under the existing laws, and they had no leaders worthy of mention. The road to power and glory did not yet lie in championing their cause. It required the astute leadership of Jefferson, and the creation of a federal machine under his direction, to consolidate the heterogeneous petty interests against the Federalist group.

But during Hamilton’s administration, representatives of these smaller interests began to attack his policies as inimical to public interest, i.e., their own interests; and out of this attack grew the charge that Hamilton himself was privately engaged in augmenting his personal fortune by the methods which he had created for the advantage of public creditors and financiers generally. Although this charge, even if true, should not be allowed to obscure the real greatness of Hamilton’s masterly mind, and has little bearing upon a scientific application of the economic interpretation to the period, it deserves examination at length.

Rumors that Hamilton was personally interested in securities were persistent from the beginning of his career as Secretary of the Treasury, and in his famous Reynolds pamphlet, published in 1797, he precisely states the charge against himself: “Merely because I retained an opinion once common to me and the most influential of those who opposed me, that the public debt ought to be provided for on the basis of the contract upon which it was created, I have been wickedly accused with wantonly increasing the public burthen many millions in order to promote a stock-jobbing interest of myself and friends.”[^[224]] That this heavy burden was necessary to secure the support of the financial interests concerned, and that their support was absolutely indispensable to the establishment of the new national system on a substantial basis, was admitted by many of Hamilton’s worst enemies; but this did not prevent their attacking the Secretary on mere rumors of private peculations.

It now remains to examine the evidence against Hamilton, and state the case fairly so far as our existing records will allow. In 1793, Hamilton was accused of a criminal violation of the laws, and laid under the suspicion of being a defaulter. The House of Representatives was so impressed with the charges that it appointed a committee to investigate the conduct of the Treasury Department, particularly with regard to the charge that Hamilton had made the public moneys “subservient to loans, discounts, and accommodations” to himself and friends.

The result of this investigation was a vindication of the Secretary by the committee on the basis of affidavits from the officers and employees of the various banks involved, public and private. Hamilton cites the report of this committee of the House as containing the “materials of a complete exculpation.”[^[225]] But this investigation does not cover the dealings which Hamilton might have had with stock brokers and other persons handling public securities. Evidences of such relations would not have been contained in the public and private papers available to the committee. Indeed, on account of his intimate business relations with all the leaders who were buying and selling public securities, and, on account of the fact that he could have seen them personally at New York and Philadelphia, it would not have been necessary for him to make any written record of such transactions. But of the larger charges brought against him in Congress we may regard this report as a complete vindication.

The direct charge, however, that Hamilton had violated the solemn obligations of his own office by buying up public securities, as distinct from the charge that he had employed his high authority in the interests of his friends and his class, first took on a serious form in 1797, when the notorious pamphleteer J. T. Callender, in his History of the United States for the Year 1796 published a series of papers purporting to show that in 1791 and 1792 Hamilton had been engaged in speculative ventures with one James Reynolds and Mr. Duer.[^[226]] It appears that in 1792 a Mr. Clingman, then in jail for a crooked transaction with the government, got into communication with Speaker Muhlenburg and hinted that a fellow-prisoner, Reynolds, had been associated with Hamilton in security operations, and had in his possession papers that would establish the facts in the case. Muhlenburg communicated with Monroe and Venable, and the three heard from Reynolds and his wife grave charges against the Secretary.

On learning of these serious charges, Muhlenburg, Venable, and Monroe confronted Hamilton with them and the Secretary explained that the whole charge of speculation was false and that his relations with the Reynolds grew out of an unhappy amour with Mrs. Reynolds. The three investigators accepted this explanation, although Monroe prosecuted further inquiries which resulted in his accumulating additional charges. The papers in the case, it was agreed by Hamilton and his three investigators,[^[227]] were to be kept secret and out of the reach of publication. It turned out, however, that Monroe, angered by the abuse heaped upon him later by the Federalists, gave the documents out for publication, much to the scandal of the country. Hamilton promptly replied in a pamphlet in which he denied any improper financial relations with Reynolds, and explained in painful detail his affair with Reynolds’ wife.[^[228]]

When all the external and internal evidence is taken in this case, and the documents connected with it are carefully analyzed, it will be apparent that a decision will rest upon the answer to this question: “Shall Hamilton’s testimony as to speculations outweigh that of an undoubted rascal and his wife?” Mr. F. T. Fox, in a recent study of the matter, attempts to convict Hamilton on the internal evidence of his vindication; and apparently does so. But on an examination of Mr. Fox’s brief against the Secretary, it soon comes out that he has made a mistake in the crucial dates on which turns his whole case.[^[229]] Consequently, this particular matter rests just where it did more than a hundred years ago. Fair-minded men will be inclined to exonerate Hamilton of the charge brought in the Reynolds indictment.

That Hamilton himself made any money in stocks which he held personally has never been proved by reference to any authentic evidence. He did hold a small amount of public securities, for in a letter of June 26, 1792, to William Seton, he says, “All my property in the funds is about $800, 3 per cents. These at a certain period I should have sold, had I not been unwilling to give occasion to cavil.”[^[230]] The origin of this holding is not explained. Even if it was derived from the funding under the acts of August, 1790, and the 6 per cents, funded and deferred were added, it would not have made more than a trifling amount.

That Hamilton ever held any considerable sum in securities seems highly improbable, for he was at no time a rich man, and at his death left a small estate. Though he lived well, and had a large income apart from his paltry salary as Secretary, his earnings as an eminent lawyer may very well account for such sources of revenue as he may have enjoyed. Certainly, had he seen fit to employ his remarkable talents in private enterprise, he might have died one of the rich men of his day. However this may be, the question may be legitimately asked whether Hamilton had any personal connections with any of the security operations which were carried on during his administration of the Treasury?

Hamilton’s defenders, in response to such an inquiry, will cite his famous reply to Henry Lee in 1789, when the latter asked him for his opinion about the probable rise of public securities: “I am sure you are sincere when you say that you would not subject me to an impropriety, nor do I know that there would be any in answering your queries; but you remember the saying with regard to Cæsar’s wife. I think the spirit of it applicable to every man concerned in the administration of the finances of the country. With respect to the conduct of such men, suspicion is ever eagle-eyed, and the most innocent things may be misinterpreted.”[^[231]]

On the other hand, Maclay, who, as United States Senator during the funding operations, had opportunities for first-hand information, answers the above question in the affirmative. He says, in his record of the Senate on February 1, 1790: “If I needed proof of the baseness of Hamilton, I have it in the fullest manner. His price was communicated in manuscript as far as Philadelphia. Thomas Willing, in a letter to the speaker of the Representatives, after passing many eulogiums on Hamilton’s plan, concludes, ‘For I have seen in manuscript his whole price,’ and it has been used as the basis of the most abandoned system of speculation ever broached in our country.”[^[232]] What Maclay doubtless means here is that Hamilton had communicated to one of the leading financiers of Philadelphia, a partner of Robert Morris and dealer in securities,[^[233]] his proposed plans for redemption of the public debt in full, previous to their publication in the first report to the House on public credit, January 9, 1790. On the question as to how much credence should be given to the assertions of the querulous Maclay, students of history will differ, and impartial scholars will seek further evidence.

Far from admitting any truth in Maclay’s allegations, Hamilton’s friends would indignantly deny that he had any private connections with security operations in any form. Hamilton’s son, in his Reminiscences, states that “Hamilton requested his father-in-law, General Schuyler, not to permit his son to speculate in the public securities lest it should be inferred that their speculations were made upon information furnished by Hamilton; or were made in part on Hamilton’s account. Schuyler inhibited any speculations; as Van Rensellaer Schuyler, my uncle, told me, complaining at the same time that, but for this inhibition, he would have made a large sum of money.”[^[234]]

The General, however, evidently did not regard this inhibition as binding upon himself, for he appears upon the records as one of the large dealers in public paper in New York. Examples of his extensive financial transactions can be readily found by reference to the old loan books in the Treasury Department; there appear in March, October, and November, 1791, the following amounts to his credit: $23,189.21; $15,594.61, $8036.50, $20,689.21.[^[235]]

Neither did Hamilton deem it necessary to inhibit his brother-in-law, J.B. Church, from dealing in securities. During Hamilton’s administration of the Treasury, Church was a large holder of public securities.[^[236]] One entry credits him with $28,187.91 worth. Moreover, while Secretary of the Treasury, through his agents, Thomas Willing in Philadelphia, and Wm. Seton in New York, Hamilton bought and sold for his brother-in-law. In the Hamilton Mss. in the Library of Congress is preserved a letter from Thomas Willing bearing the date of February 24, 1790, and addressed to Hamilton, which shows that the former was then selling stocks under the latter’s orders for Church.[^[237]]

At a later date, Hamilton was engaged in an extended correspondence with William Seton of the New York Bank, which shows that the latter was buying United States Bank stocks for Church, under Hamilton’s orders. On November 21, 1793, Seton writes that he has not been able to make an investment for Mr. Church on account of the high price of bank stock.[^[238]] Five days later Seton writes to Hamilton that he thinks it will be possible in a day or two to purchase stock for Mr. Church “under your limits;” and adds, after further remarks, “I therefore feel loth to enter into the market without further orders from you.”[^[239]] Here follows voluminous correspondence showing Seton’s successful purchases.

Hamilton’s operations for his brother-in-law, Church, also extended to speculations in public lands; for in the Hamilton Manuscripts there is a letter bearing the date of August 24, 1792, from William Henderson to him relative to the purchase of large quantities of land (45,000 acres).[^[240]] It appears that Hamilton, Church, and General Schuyler were involved in this negotiation, and that Church was the principal.

Hamilton was also personally interested in western land schemes, for he held five shares of the Ohio Company, proprietors of land on the Muskingum River.[^[241]] Although this concern was organized before the formation of the Constitution, Hamilton as Secretary of the Treasury was called upon to pass upon the validity of claims involving thousands of acres. He felt the delicacy of this situation, for on May 9, 1792, he wrote to Washington that he regretted that he was required by law to decide a case in which he was an interested party, and stated that he had left the matter to be adjusted by the accounting officers of the Treasury acting under an opinion of the Attorney General.[^[242]]

Although Hamilton showed great hesitancy in passing upon his own land claims while Secretary, he did not deem it incompatible with his official duties to communicate occasionally with friends as to the probable prices of public securities and bank stock.

For the communication to Willing, mentioned above,[^[243]] we have, of course, only Maclay’s testimony; and if his statement is true Hamilton transmitted official secrets of the most significant character to a financier who, however great his integrity, was in a position to take advantage of them, and was engaged in dealing in securities on his own account and for Hamilton’s brother-in-law, Church, under Hamilton’s orders. When we remember that Maclay’s journal was private in its nature, not intended for publication, and not given to the world until long after all the men mentioned in it were dead, we are constrained to give some credence to his straightforward statements like the one in question, even though he was a bitter enemy of the Federalist leaders. But we are not constrained to attribute to Hamilton any improper motives. Those who assume that the Secretary of the Treasury could have carried out his enormous reorganization of the finances without conferring with the leading financiers of the time have only an elementary knowledge of Treasury administration.

As Secretary, he often found it necessary to set rumors at rest. An instance is afforded in a letter written by Hamilton, on August 17, 1791, to Rufus King, in which he mentioned having given out his opinion on prices to counteract an undue rise in script on the stock market, and concluded by giving King his standard of prices on that day, saying “I give you my standard that you may be able if necessary to contradict insinuations of an estimation on my part short of that standard for the purpose of depressing the funds.”[^[244]]

This letter from Hamilton was evidently drawn by one from King bearing the date of August 15, 1791, in which the latter cautions the former against giving out any statements which might affect prices, and informs him that his opinions had been quoted in efforts to depress stocks.[^[245]] King also adds that Duer had been injured in attempts to raise prices, but is of the opinion that “his conduct has been as correct as any buyer’s and seller’s could be.” King had little liking for popular vagaries in finance, for he tells Hamilton that “the fall of Bank certificates may have some good effects; it will operate to deter our industrious citizens from meddling in future with the funds, and teach them contentment in their proper avocations.”

On the same day that Hamilton replied to King’s letter which had informed him of Duer’s danger, he wrote to Duer cautioning him against pushing prices too high and repeating earlier warnings. He says: “I will honestly own I had serious fears for you—for your purse and for your reputation; and with an anxiety for both, I wrote you in earnest terms. You are sanguine, my friend. You ought to be aware of it yourself and to be on your guard against the propensity.... I do not widely differ from you about the real value of bank script. I should rather call it about 190, to be within bounds, with hopes of better things, and I sincerely wish you may be able to support it at what you mention.”[^[246]] There is of course, little beyond friendly advice in this, although Hamilton’s enemies may see impropriety in his communicating his own price to a man deeply engaged in speculation.

There is some evidence, however, which may reasonably be interpreted to imply that Hamilton might have used his official power in behalf of Duer. In reply to a letter from Duer (after his disastrous failure) making some request which is not explained by Mr. Lodge, the Secretary says: “Your letter of the 11th got to hand this day. I am affected beyond measure at its contents, especially as it is too late to have any influence upon the event you were apprehensive of, Mr. Wolcott’s instructions having gone off yesterday.”[^[247]] Wolcott was Hamilton’s subordinate in the Treasury Department, and evidently he had issued some instructions which affected Duer’s fortunes. Wolcott was the auditor of the Treasury whose duty it was under the act of September 2, 1789, “to receive all public accounts and after examination to certify the balance, and transmit the accounts with the vouchers and certificates to the Comptroller for his decision thereon.” This connection with Duer is the sole piece of evidence of what might be termed the possible use of the Secretary’s office in a private matter. The nature of this is not clear, and the plan was not carried out.

The conclusion to be reached from this evidence is that Hamilton did not have in 1787 any more than a petty amount of public securities which might appreciate under a new system; that he did have some western land; but that an extensive augmentation of his personal fortune was no consideration with him. The fact that he died a poor man is conclusive evidence of this fact. That he was swayed throughout the period of the formation of the Constitution by large policies of government—not by any of the personal interests so often ascribed to him—must therefore be admitted. Nevertheless, it is apparent from the additional evidence given here that it was no mere abstract political science which dominated his principles of government. He knew at first hand the stuff of which government is made.

William C. Houston, of New Jersey, was of no consequence in the Convention, and little is known of his economic interests. He was a Princeton graduate, and was for a time professor of mathematics and natural philosophy. He entered the practice of law at Trenton, and from 1784 until his death in 1788 he was clerk of the Supreme Court of his state. On account of ill health he was unable to remain through the sessions of the Convention. A search among the New Jersey loan office records in the Treasury Department failed to reveal Houston as a holder of securities; but the records for that state are incomplete and Houston’s death in 1788 would have prevented his appearing on the Treasury Records of the new government. A William Houston is recorded in the New York books for small amounts of deferred sixes,[^[248]] but, although William Churchill Houston had a son by that name, the identity of the son and the public creditor cannot be established.

Houston was, however, interested in the possibilities of western land speculations, for his biographer relates that he “joined with others in procuring for John Fitch, the steamboat inventor, the office of Deputy Surveyor. After the treaty of peace with England, the question of how the lands northwest of the Ohio should be disposed of was mooted in Congress. It was thought that they would be sold to pay the debts of the confederacy. Fitch was a land jobber and supposed that a good operation might be made by a presurvey of the country, so that when the Land Offices were opened, warrants might be taken out immediately for choice tracts. He found no difficulty in forming a company to forward such an enterprise. It was composed of Dr. John Ewing, Rev. Nathaniel Irwin, Wm. C. Houston.... These gentlemen put £20 each in a fund to pay expenses.”[^[249]] How far this venture was carried and whether Houston acquired lands through it is not related. As a member of the Congress under the Articles of Confederation, he doubtless learned of the advantages to be gained in the West.

William Houstoun, of Georgia, took some part in the proceedings of the Convention, but he was of little weight. He was the son of a royal officer in the government of Georgia; and he received his education in England and studied law at the Inner Temple. His colleague Pierce records that “Mr. Houstoun is an Attorney at Law, and has been a member of Congress for the state of Georgia. He is a gentleman of family, and was educated in England. As to his legal or political knowledge, he has little to boast of.”[^[250]] The meagre biographical details available do not permit a statement of his economic interests; and the paucity of the records of the Georgia loan office in the Treasury Department makes it impossible to say whether he was among the beneficiaries through the appreciation of public securities. An index to a volume of Treasury Records not found (Vol. XXVI, folio 44) contains the name of William Houstown, but whether this holder of public debt and the member of the Convention were identical cannot be determined.

Jared Ingersoll, of Pennsylvania, was the son of Jared Ingersoll of Connecticut, sometime agent of that colony as commissioner in England and later admiralty judge in Pennsylvania. He graduated at Yale and studied in the Middle Temple. At the bar in Philadelphia he “soon rose to first rank. His practice was larger than any others. His opinions were taken on all important controversies, his services engaged in every great litigation.”[^[251]] Ingersoll was a man of considerable wealth, but he does not seem to be involved in the large transactions in public securities which engaged the attention of his intimate friends in the Convention.[^[252]] He does not appear on the Pennsylvania books as a holder of securities. If he held any, his transactions must have been with the Treasury direct, and this would have been very convenient as it was located in Philadelphia during the funding process. Ingersoll was a son-in-law of Charles Pettit, one of the security operators in Philadelphia.[^[253]]

Daniel of St. Thomas Jenifer, of Maryland, is reported by Pierce to have been “a gentleman of fortune” in his state.[^[254]] He was a planter and a slave-holder; the census of 1790 records his holding twenty slaves on one plantation under an overseer, but the number on his own plantation is illegible.[^[255]] It is probable also that he held a small amount of public securities at the establishment of the new government. He died in the latter part of the year 1790, but his son,[^[256]] Daniel Jenifer, Jr., appears on the loan office records as the holder of nearly six thousand dollars’ worth of paper in December, 1790,[^[257]] which he disposed of the following year.[^[258]]

William Samuel Johnson, of Connecticut, was a son of Samuel Johnson, a clergyman of Stratford, Connecticut, and a gentleman of some means. He was a graduate of Yale, and entered the practice of law. He refused to aid in the Revolutionary cause, because he could not “conscientiously” take up arms against England, and he lived in retirement until the War was over. After the establishment of independence he resumed the prominent position in public life which he had enjoyed before the struggle; and according to his biographer he took “the highest rank in his profession and became the renowned and high-minded advocate who was always crowded with cases and had his clients in New York as well as in every part of Connecticut.”[^[259]] He added to his own patrimony by marrying the daughter of a “wealthy gentleman” of Stratford.

Johnson was a member of the first Senate under the new Constitution, and he was included by Jefferson in the list of men “operating in securities.”[^[260]] It is highly probable that he did not aid the Revolutionary cause by investing his money in the original paper; and he does not appear on the Treasury Books for large amounts of stock,[^[261]] but there is every reason for believing that he carried on extensive operations through his son Robert Charles Johnson. The latter was speculating extensively in New York and Connecticut immediately after the establishment of the new government, and two entries show a credit to the father through the son.[^[262]] The loan office books under the date of December 13, 1791, credit Robert Charles Johnson, of Stratford, Gentleman, with nearly fifty thousand dollars’ worth of sixes and threes.[^[263]] Connecticut loan office receipts confirm this evidence of his extensive holdings. The New York loan office also shows large transactions in the name of Robert Charles Johnson.[^[264]]

Rufus King, of Massachusetts, was born in Scarborough, Maine, then in the province of Massachusetts, March 24, 1755. His father, in 1740, was “in prosperous business as a trader and factor for Ebenezer Thornton, one of the principal merchants in Boston for whom he purchased and prepared large quantities of timber.” On settling at Scarborough, his father became “both a farmer and a merchant, and in each capacity was so successful as to become the owner of three thousand acres of land divided into several valuable farms and to be the largest exporter of lumber from Maine.” Rufus was educated at Harvard. When his father died in 1775 he left a good estate which was divided among several children. Rufus King was also fortunate in his marriage; his wife was Mary Alsop. Her father at first sympathized with the movement against Great Britain, but, “taking umbrage at the manner in which the New York convention had conveyed their adhesion to the Declaration of Independence to the Congress, and besides unwilling to close the door of reconciliation with Great Britain,”—he retired to Middletown, Connecticut, and stayed until after the War was over, when he returned to New York, resumed business, and became president of the Chamber of Commerce. According to King himself, his wife “was the only child of Mr. John Alsop, a very respectable and eminent merchant in this city [New York]. Mr. Alsop declined business in 1775 with a very handsome fortune.”[^[265]] King thus had extensive mercantile and other business interests which were largely managed for him by others, so that he was able to devote most of his time to politics.

Nevertheless, he did not neglect matters of private economy. Robert and Gouverneur Morris were engaged in 1788 in a plan to associate a number of Americans in a project to purchase up the debt (or portions thereof) of the United States due to France. Wadsworth, General Knox, Osgood, and Colonel Duer were involved in it. It was first proposed to send Gouverneur Morris as minister to Holland to further the scheme. The originators of the plan finally hit upon the appointment of Rufus King. King replied to the overture: “I told Col. Duer that I was not indisposed to a foreign appointment—that the honor and duties of such an office wd. be my sovereign rule of Cond. and that if in perfect consistence with the duties and dignity of the office, I cd. promote the interest of my friends, it wd. be a great satisfaction to me. But that I desired not to be considered as giving an answer any way at present, that ... the opinions of Mr. Jay and Col. Hamilton were of consequence in my mind. That previous to any decision on my part I must be ascertained of their opinions.”[^[266]]

Whether King engaged in this ambitious project or not, there is evidence to show that he was a considerable holder of government paper shortly after its establishment. It may be that a part of his fortune had been invested originally in public securities, although this is not apparent from the early loan office books in the Treasury Department. Jefferson puts King down among the holders of bank stock and public securities;[^[267]] and he is correct in his statement. King was director in the first United States bank.[^[268]] He was also a large holder of government securities—one entry records more than $10,000 worth to his credit.[^[269]] King thought that speculations should be reserved to the experienced, and rejoiced in the hope that one of the crashes would teach the ordinary industrious citizens “contentment in their proper avocations.”[^[270]]

John Langdon, of New Hampshire, was born on the family farm near Portsmouth in 1740, and “after a mercantile education in the counting room of Daniel Rindge, he entered upon a sea-faring life, but was driven from it by the revolutionary troubles.” He must have prospered, however, before the War blighted his trade, for when the news of the fall of Ticonderoga reached Exeter, he rose in the legislature of which he was the speaker and said: “I have a thousand dollars in hard money; I will pledge my plate for three thousand more. I have seventy hogsheads of Tobago rum which will be sold for the most they will bring. They are at the service of the state. If we succeed ... I will be remunerated; if we do not then the property will be of no value to me.”[^[271]]