John Torrey Morse.

The life of Alexander Hamilton, by John T. Morse, Jr online

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speculation with dread, and exerting his personal
influence and all the just means within his reach
to stay its course, that he should have suffered in
his reputation from false and idle tales to the effect
that he himself was interested in it. Duer, with
whom he was intimate, was speculating among the
wildest, and the detractors of Hamilton would have
it that there was some kind of secret partnership
between the two. In fact, Hamilton's private corre-
spondence shows that, so far from abetting, he expos-
tulated warmly and repeatedly .with his infatuated
friend. Of course his kindly warnings were in vain,
as warnings always are in such cases. Duer would
not be controlled. The result was that he failed and
was thrown into prison by his creditors, in which
unhappy strait he received assistance from Hamilton,
both in money and in efforts to procure his release.




The reyenue laws during their early trial worked
with much success. The president in his message to
Congress stated with satisfaction that, in a period of
a little more than thirteen months, 11,900,000 had
been collected, and the national credit had been so
far improved in public estimation that the certificates
of the national debt were now salable at seventy-five
cents on the dollar. It was, nevertheless, necessary
to raise about 1826,000 more than could be fairly
expected to accrue from the sources already estab-
lished. Accordingly, on December 13, 1790, Hamil-
ton sent into the House another report on the public

His recommendations prfeviously offered, concern-
ing taxation of wines and spirits of home manu-
facture, had not been very favorably received by
Congress. The unpopular name of excise had raised
a vehement and successful opposition. Now, how-
ever, he ventured to renew them in the belief, as he
said, that collateral and temporary considerations,
since removed, had hitherto prevented their adoption.
For the best argument that had been brought against


this project when it was first suggested was that, if
the State indebtedness should not be assumed by the
nation, the States would need this resource. Now,
however, that indebtedness having been assumed, the
same argument would show that the national treasury
in its turn would stand in need of this means of in-
come, and that the States could do without it.

The scheme of an excise might be expected to work
well in connection with the imposts on imported
liquors, for the collection of which an improved
machinery was needed. Heretofore the security of
the revenue had depended chiefly upon the integrity
of the individual importers. The oaths of the mer-
chants, being the parties most interested to evade the
duty, had furnished nearly the sole security for their
compliance with the laws. Hamilton chose now to
transfer this security and to found it upon the vigil-
ance of public officers. The reliance upon the dealers
had proved to be too often misplaced. The principle
of such legislation was bad; because, as Hamilton
expressed it, it was " not sufficiently in accord with
the bias of human nature." The new regulations
might be arranged to include home-made as well
as imported liquors, with little increase in expense
over a system applicable to the latter only.

An excise had always been an unpopular form of
taxation in Great Britain, where the name of the
exciseman had passed into a term of reproach more
offensive than that of the publican of old ; and a not
less resolute antipathy had been manifested at the
preceding session of Congress to its introduction into
this country. Yet it was not really a novelty even
among the States, and the secretary's proposition was


only to extend to the country at large taxes similar
to those which had already been established in Massa-
chusetts, Pennsylvania, Connecticut, and to some
extent also in other quarters. Opposition had been
chiefly based upon the arbitrary and excessive au-
thority of entry, search, seizure, and confiscation
customarily conferred upon officials. From the plan
proposed by Hamilton these odious traits had been
carefully eluninated. The officer of excise "was to
have no summary jurisdiction, no right of indis-
criminate visitation. He could enter only such
depositories as the dealers themselves should desig-
nate by public insignia ; and in case of oppression, or
even of unintentional mischief, compensation was
granted, which was really chiefly open to objection on
the ground that it was upon a scale dangerously
liberal and actually tempting to abuse.

Whatever the objections to an excise, greater objec-
tions existed to any other tax. It was better than a
tax on houses and lands, which could never be made
to bear equally, and which Hamilton wished to see
held in reserve for exceptional emergencies. It was
better than putting additional duties on merchandise
imported from foreign parts. For most imports were
already taxed quite high enough. Nor would it be
wise to make the importers think that the whole
revenue of the country was to be collected from and
through them.

The secretary closed his report by suggesting the
expediency of establishing a system of bonded ware-
houses, thereby conferring upon the importers one
of the greatest boons and conveniences ever devised
in their behalf.


The plan was vehemently opposed in the House,
chiefly upon various grounds of separate local in-
terest. Georgia did not wish to see her trade with
the West Indies encumbered. In North Carolina the
people drank so much that the tax would fall with
exceptional and terrible severity upon her"; nor did
her representatives seem to think that any improve-
ment in the health and morals of their constituents
would compensate for the infringement upon their
favorite luxury. Jackson, a blatant creature, always
in opposition and always violent, declared that an
excise would deprive the mass of the people of the
southern States " of almost the only luxury they enjoy,
that of distUled spirits." There was much eager
debating, but the result was the passage of a bill
nearly coinciding with Hamilton's recommendation.
A duty was imposed upon imported spirits, ranging
from twenty to forty cents per gallon according to
strength ; and the excise upon domestic spirits varied
from nine to twenty-five cents per gallon on those
manufactured from grain, and from eleven to thirty
cents on those made from molasses or other imported
material. To a generation which has seen an excise
of two dollars per gallon levied on home-distilled
whiskey, these rates do not appear very exorbitant,
nor such as to justify the strenuous hostility which
was aroused against the secretary's schedule.


A nation having been established, it seemed proper
that there should also be established some distinctive
and standard national currency. Hitherto nothing
of the sort had existed, and the United States was


dependent upon the coinage of other countries for all
its hard money. In spite of the fact that the colonies
had been in such -close commercial connection with
Great Britain, the money unit of that country had
not been kindly adopted by her cis-atlantic depend-
encies. Pounds, shillings, and pence, had been
' nearly superseded in the common reckoning by the
Spanish dollar and the cent of the Continental Con-
gress. The propriety of providing a mint had often
been pressed during several years past, but the diffi-
culties and obstacles inherent in the undertaking had
prevented its accomplishment. In the first tariff act
Congress had treated the Spanish dollar as the mone-
tary unit, and other coins were declared to be receiv-
able in payment of duties at rates determined by
their ratio of value in comparison with this piece.
Of course it was undesirable for many practical rea-
sons, as well as unworthy of the dignity of the
nation, to permit such an arrangement to be other-
wise than temporary. Accordingly, the establishment
of a national coinage and a national mint was a sub-
ject demanding the early attention of the secretary of
the treasury.

This was no such simple business as the citizens of
an old country are apt to deem it. Indeed, when
for gold and silver pieces mere printed scraps are
substituted, the manufacture of money seems reduced
to the last degree of simplicity. Yet such appear-
ances are sadly misleading, and Hamilton had many
questions to consider, much information to obtain, ere
he could make a report containing mature and suffi-
cient recommendations. " A plan," he said, " for an
establishment of this nature involves a great variety


of considerations — intricate, nice, and important.
The general state of debtor and creditor; all the
relations and consequences of the essential interests
of trade and industry ; the value of all property ; the
whole income both of the State and of individuals,
— are liable to be sensibly influenced, beneficially or
otherwise, by the judicious or injudicious regulation
of this interesting object." Those who have not
studied the subject may be somewhat surprised at
the magnitude of importance quite correctly attached
to it in these words.

It needs but to continue the perusal of the report,
to be convinced that Hamilton did not exaggerate the
gravity of the task. This matter of coinage and
currency, which in its present familiarity attracts
scarcely a passing thought, involved a vast deal of
laborious reflection before it could be created. Few
readers would follow an abstract however abbre-
viated of this document ; yet if it was the dryest, it
was certainly not the least difficult or important of
the many labors of the secretary at this period. Suf-
fice it to say, that he established with much care the
proper value of the dollar, the ratio of gold to silver,
the amount of alloy, and the amount of charge which
could be wisely made to the individual for the pro-
cess of coining his bullion into money, — a question
by the way of great difficulty and bringing in its
train some very nice and singular influences upon
international exchanges and trade.

The number and proportional value of the new

coins must be in a measure experimental. It would

be well to start with a few, and to multiply them

according to the exigencies of the people. The sec-

voL. I. 23


retary accordingly advised beginning with the follow-
ing : A ten-dollar gold piece ; a one-dollar gold piece ;
a one-dollar silver piece ; a silver dime, being one-
tenth of the unit; a copper piece, being one-hun-
dredth of the unit ; a second copper piece, of one-
half the value of the other. The gold dollar was
not expected to circulate largely. The chief induce-
ment to its existence was that there should be a
sensible object in that metal, as well as in silver, to
express the unit.

" The devices of the coins," said the secretary,
" are far from being matters of indifference, as they
may be made the vehicles of useful impressions.
They ought therefore to be emblematical, but with-
out losing sight of simplicity." This recommenda-
tion is eminently in keeping with the somewhat
didactic spirit of an age when public moralizing was
the fashion, and the utterance of fine moral senti-
ments appeared neither dull nor ridiculous. The
country has outgrown the form of expression as well
as the substance of the advice. Whether the head
labelled with the glorious title of Liberty, or the
astonishing eagle which decorated our hard money a
score of years since, tended to raise any improving
thoughts in the minds of the people may be doubted
by the sceptical ; certainly, no one can even doubt
whether the portraits and decorations of the " green-
back " and " postal " money are likely to be the
" vehicles of useful impressions " to any person.

When the subject came before Congress, this matter
of the device gave rise to a debate very elaborate and
warm at the time, but furnishing no small material
for entertainment now. For one side of the coin,


the eagle and the legend "United States of America"
were very readily and harmoniously adopted. The
disposition of the other side gave rise to serious con-
troversy. The Senate proposed " an impression or
representation of the head of the president of the
United States for the time being," with a legend re-
citing his name, his order of succession in the presi-
dency, and the date of the coinage. The republican
spirit of the lower House took a dreadful alarm at
this insidious proposition. The image and super-
scription of Caesar constituted the first step toward
Csesarism. The head of the president upon the coin
of the country would pave the way to monarchy and
despotism. One gentleman asserted that the scheme
" had a very near affinity to titles, that darling child
of the other branch of the legislature, put out at
nurse for the present, but intended to be recognized
hereafter with all due form." Such was the tone of
an animated discussion. The result was that the
House amended the Senate bill by substituting an
" emblematical figure of Liberty " for the presiden-
tial likeness. The Senate returned the bill thus
amended, with their refusal to concur. The debate
was renewed with much expression of feeling in the
House, which insisted on the amendment. At length
the Senate yielded. But the artists experienced much
tribulation in their efforts to achieve a satisfactory
" emblematical figure " of the fine abstraction which
they were called upon to represent. A friendly at-
tempt was again made to relieve them of their em-
barrassment by adopting the head of Columbus,
which seemed commendable on the grounds of in-
volving no political danger and being not inappro-


priate. Congress however were not to be allured
from their imaginative mood, and the result, if not
all that could be desired sesthetically, was at least
innocuous to the State. The factitious importance
bestowed upon this subject resulted in such con-
sumption of time, that it was considered in two
separate sessions of Congress before it was finally
disposed of.

The recommendations of Hamilton were finally only
imperfectly adopted. Coinage was made free, except
when coin was simultaneously exchanged for bullion,
in which case one-half of one per cent was deducted.
Otherwise the English system was followed ; and the
only compensation obtained by government, or paid
by the individual, was indirectly in the shape of in-
terest during the period of delay between the deliv-
ery of bullion and the receipt of coin. Congress
also resolved to put forth a much greater variety of
coins than had been suggested by the secretary as ad-
visable at the outset ; namely, — the eagle, half-eagle,
and quarter-eagle in gold ; the dollar, half-dollar,
quarter-dollar, dime, and half-dime, in silver; the
cent and half-cent in copper. The ratio of gold to
silver was established at one to fifteen ; but in spite
of the care with which the calculation had been
made, or rather by reason of the working of new
influences just coming into operation, this proportion
turned out to be erroneous. By it the gold coin was
much undervalued, and did not come freely into




No sooner did tlie adoption of the Constitution
render an uniform tariff throughout the States a
possibility, than the question was raised as to the
policy upon which that tariff should be constructed.
Should it be arranged with a sole view to the reve-
nue to be obtained from it, and to this end provide
for the imposition of such duties as would render the
largest returns at the smallest charge of collection ?
Or should it be composed with a view to the protec-
tion of home industries and domestic products from
foreign competition?

The immediate necessity of raising some ready
money led to the passage of a tariff bill at the first
session of Congress. It was prepared and carried
through the House chiefly by Madison ; and its con-
tents, no less than the general tone of the debate in
which it was discussed, showed a decided leaning to-
wards the protective system. But this legislation was
temporary, and was at the time known to be so. The
permanent system of the country was left for subse-
quent and more leisurely development. When at
last Congress felt able to give the subject due atten-


tion, it applied as usual to Hamilton to furnisli
information and opinions.

A topic so important and so congenial to his tastes
caUed forth his best exertions. A series of extensive
investigations conducted by every feasible kind of
inquiry and research, both in foreign parts and in the
United States, furnished the material for his reflec-
tions. He took abundant time to digest as well as to
collect the great mass of information thus acquired,
and it was not until nearly two years had elapsed
since the order for the report was passed that he sent
in the document to the House of Representatives. In
some respects it deserves to be regarded as the ablest
of all his State papers. The basis was furnished by
a knowledge as wide, thorough, and practical as has
ever been brought to the discussion of this vexed
question. The inferences and arguments constituted
as able a presentation of the protectionist theory as
has ever been made. Arguments have since that era
been put into new forms, and a host of fresh similes
and comparisons have been suggested. But the sub-
stance of the reasoning has received no material ac-
cession, and a report to the same purport as that of
Hamilton could not be written to-day which should
excel the one he drew up in 1791.

It is, however, an incorrect construction of that
report to regard it as a vindication of the general or
abstract doctrine of protection. Hamilton was very
far from assuming any such position ; protection al-
ways and everywhere was not his theory ; protection
was not his ideal principle of commercial regulation.
For example, it is altogether impossible to predicate
from any thing contained in this report what would


be its writer's opinion as to the proper policy in the
present circumstances of this country were he alive
to-day. So far from entertaining any predilection
for protection in the abstract, it would seem that in a
perfect commercial world he would have expected to
find free trade the prevalent custom. If the system
of perfect liberty to industry and commerce were the
prevailing system of nations, then each country would
have the full benefit of its peculiar advantages to
compensate for its peculiar disadvantages. If one na-
tion were in a condition to supply manufactured arti-
cles on better terms than another, that other might
find an abundant indemnification in a superior capac-
ity to furnish the produce of the soil ; and a free
exchange, mutually beneficial, of the commodities
which each was able to supply on the best terms
might be carried on between them, supporting in full
vigor the industry of each.

In other words, if free trade were the rule of the
whole commercial world, Hamilton was not prepared
to say that the United States would find it for her
interest to be singular. But such were not the prem-
isses from which he had to draw a conclusion. A
quite opposite condition of things existed. The
commercial relations of Great Britain to the United
States then outweighed in importance to the latter
country the connections which were or might become
established with all the other countries of the globe,
civilized and barbarian, besides. But Great Britain
in those days was as far gone in the extremes of pro-
tection as she is now advanced in the contrary direc-
tion of free trade. American commerce had been
taught in the colonial days to seek British channels.


The mother country and her provincial dependencies
had absorbed it all. The old familiar wa-ys were not
to be exchanged for new ones, even if new ones
equally good could be opened, except slowly and re-
luctantly. Yet ever since the peace. Great Britain
by her laws and her orders in council had pursued
with unrelenting vigor and consummate skill the sys-
tem of commercial oppression towards this country.
She seemed resolved to impoverish her revolted prov-
inces so far as lay in her power, to make them pay
commercial tribute, and to subject them to a commer-
cial dependence so far as her ability could go ; and
for this purpose her ability had been proved to be
very great.

Hamilton's business was to consider what it was
wise for the United States to do in the actual condi-
tion of commercial affairs then prevalent in the world
around them ; not to consider what condition of affairs
it would be desirable to establish throughout that
world, or what would be wise in a different condition
of things either foreign or domestic. He had a busi-
ness problem to solve, not an essay to write. This
end he kept strictly in view throughout his argu-
ments and recommendations. Artificial arrange-
ments surrounding the United States, and acting
immediately and very forcibly upon them, could
not be ignored by them in determining their
own policy. If other nations clothed themselves
in protective regulations, this new people might
be compelled to adopt similar integuments. Of-
fensive legislation abroad seemed properly to be
met by defensive legislation at home. Moreover
experience had already brought some opportunity for


judging. Those yery obstacles tliro-wii so vexatiously
and pertinaciously in the way of our trade had them-
selves already contributed to furnish strong argu-
ments in favor of the policy by which they were to
be counteracted. For these embarrassments had ac-
celerated internal improvements, and the results of
the efforts of the people thus stimulated to help them-
selves had been eminently satisfactory.

Altogether apart from any considerations drawn
from the attitude justly or wisely to be assumed by
this country towards the European powers, the adop-
tion of the principle of protection in the childhood
of the republic ought, as Hamilton argued, to com-
mend itself upon its intrinsic or domestic merits. It
may be conceded without imperilling this conclusion,
that there was truth in the arguments of the anti-pro-
tectionists to the effect that protection was expensive
to the people at large ; that industry in its natural
channels would be most remunerative ; that private
enterprise and individual shrewdness cotild be most
safely trusted to select and pursue all paying occu-
pations ; that any specific business could in the outset
be artificially built up only at a large public cost.
There is much to be said in reply to these positions,
and which was very ably said by Hamilton ; but this
branch of the discussion goes to the general question
of the soundness of the protective theory, and it is
not worth while to plunge into that sea of disputation
here. I say then simply that whether these posi-
tions of the anti-protectionists be answerable or un-
answerable is in a measure immaterial for the purposes
of Hamilton's report. Their truth, if truth they have,
is not conclusive concerning the proper policy of the


United States in 1791; their truth does not show
that protection of domestic manufactures, using the
phrase "manufactures" in a rery comprehensive
sense, was an error in 1791. For these arguments
only show that the people, by pursuing agriculture
as their chief if not literally as their sole occupation
during the first decade or generation of the republic,
might have grown richer than in the same period
they could have done by combining therewith pro-
tected manufacturing.

This position amounts only to saying that the
protection of manufactures cost the nation a sum,
possibly a large sum, of money. But this charge was
distributed not unequally. It was impossible indeed
so to arrange the system that it should not in its
working enable a few persons to grow rich ; and un-
questionably these persons made their money out of
the rest of their fellow-citizens. This was perhaps
an unfortunate circumstance ; but it was also inevita-
ble, and comparatively speaking it was a small matter.

Online LibraryJohn Torrey MorseThe life of Alexander Hamilton, by John T. Morse, Jr → online text (page 25 of 30)