Early Political Conflict In America: Jefferson, Hamilton, And The Washington Administration From 1791 To 1798
Shelley J Alongi

 

The issues which most woefully divided the Washington administration from 1791 to 1798 can be outlined as follows: the division into two camps on the adoption of a United States charter bank, the issue of war debt assumption by a federal government, the placement of a new seat of government, and foreign policy surrounding Jay�s treaty ratified by the senate in 1795. Assembled to resolve such conflicts were Secretary of the treasurery Alexander Hamilton who had served as an aide to General George Washington, along with his supporters in what became known later as the Federalist party, and Secretary of State, visionary, sometimes conniving, and sometimes patient and retiring Secretary of State Thomas Jefferson. These men who had served different roles in the struggle for independence (Hamilton serving on Washington�s staff and Jefferson drafting the ideas of a sometimes fractious continental Congress into a masterfully crafted Declaration of Independence represented the two camps which polarized the congress and strongly advocated their differing positions.

The arguments, which raged in regard to the adoption of the national bank were brutal and harsh, and in our eyes, perhaps seem inconsequential, nevertheless had strong pull on those deeply involved in them. Hamilton, interested in bringing the United States into a prominent position in the trading markets of Europe as well as stabilizing a debt-ridden United States economy saw the British bank as a model for solution. Plagued with different types of currency represented in each of the thirteen states, a system was required to exist for offering a single means of exchanging money that was valuable and could be used for redeeming debts or getting credit from other countries. Mounting debts within the United States and the unwillingness of British merchants, or those of other countries, to offer credit to merchants with no guarantee that their bills would be paid left the fledgling nation in desperate economic straits. Alexander Hamilton, whose background included working in the counting houses of the island of St. Croitz, and who saw the future of the United States as one of prominence in trade, stepped onto the governmental stage to offer a solution. He wished for a single currency to be backed by the silver standard. The implementation of a single currency would allow for the improvement of credit, the paying of bills between states and a standard that would allow currency to remain stable.

This solution was strongly disavowed by people who fell into the Jefferson camp. The adoption for a single currency and the consolidation for financial power into one bank threatened each state�s sovereignty. Each state had been responsible for it�s own currency and it�s own banking system. Surrendering that power to a federal institution would take away a much-coveted role from each state, concentrating it in the hands of one institution, a haunting throwback to a monarchial government, something deeply distrusted by those who had fought for severance from such ties. Agrarian-minded, states rights advocates felt their power would be lessened. I have never ascertained their solution to the mounting credit troubles between the states which existed at this time, but a powerful distrust of banks in the hands of a federal government cut deep divisions into those who had worked to establish a smaller government. This would be the beginning; they felt, of a larger government whose aims could only be corrupt. Never mind that the chartered bank in 1791 allowed the United States credit to improve, or increase over �par� by ten percent, being one of the highest in Europe. They would have none of it.

Other issues separated these men into factions. Alexander Hamilton calculated the total United States debt at close to $77.1 million. Broken down, the debt equaled $11.7 million owed to foreign governments; $40.4 million domestic debt mostly stemming from the revolutionary War, and $25 million in state debt, also related to the war. (Ellis, 55). It wasn�t the recovery of public credit that rankled Madison. Hamilton proposed to buy back government securities at their original value from war veterans who had sold the securities to speculators. Speculators, hearing of this proposal sold them to bankers who expected a profit. This enraged Congressmen who felt that the �spirit of 76� had been betrayed, that men who had risked their lives for the Revolution were being cheated by �mere moneymen.� (Ellis, 56). As if that weren�t enough, when the federal government proposed to pay the debts of all the states, eliminating thirteen ledgers, consternation once again made itself known. It was a throwback to the parliament taxing the colonies, to power once again being wrested from the several states. The plight of a nation trying to fund domestic debt and centralize a government seemed hopeless.

The permanent placement of a capitol ranked high on the list of issues to be resolved. The assumption of Revolutionary war debts by a federal government, of course, could more easily be completed when a charter bank existed, an obvious sticking point for states rights advocates. The location of the capitol and the assumption of these war debts served as the catalyst for an invitation by a migraine-plagued Jefferson for James Madison and Alexander Hamilton, principal players in these matters, to a dinner party in June, 1790 in his newly assumed quarters in New York City. Through much conversation and haggling an agreement was reached wherein the bill allowing the federal government to take on the debts passed as did the Residence Bill, moving the seat of government to it�s new location on the Potomac, after a ten year stay in Philadelphia. (Ellis, 50).


If Jefferson was plagued by headaches on occasion and worked despite them to solve a sticky issue, the British were inflicting even more annoying discomfort on the American scene. In 1794, eighteen years after the Revolutionary War began, the British still kept troops in ten forts in their former colonies, two of them in upstate new York, causing them to acquire a large part of the fir trade. They had not compensated American slave-owners for 2,000 slaves, worth $400,000. (Brookiser, 177). The British had liberated them during the Revolutionary War, nor had they been paid back for property Americans had confiscated from loyalists. In order to resolve these issues, falling back on a practice that went back to the 1750s, their navy shamelessly impressed British nationals or deserters from the new nation into their service, restricted trade with the West Indies, and seized merchant shipping, accusing them of carrying French contraband. The Washington administration did not need this trouble, especially after narrowly avoiding war with the French. In order to resolve the British issue, John Jay, who had served in the continental Congress and would later go on to serve as governor of New York, then the serve on the supreme court, was sent by Washington to negotiate a deal and returned with a treaty, which after ratification was rejected by the American public. The treaty called for the evacuation of the British from forts on the northern frontier, and allowed for trade with the West Indies, even if deeply restricted. The failure of the Senate to publish the article on West Indies trade rankled Republican opposition, already aggravating Federalist distrust. The treaty omitted the issues of impressment and did not resolve the issue of slave-owners who felt they needed repayment for lost property. Loyalist claims and prewar debts would be adjudicated by commission. (Brookiser, 122). Hotly contested and publicly denounced, Jay�s Treaty sparked angry protests and further divided the Congress. Demonstrations in New York, leading to the burning in ethigy along with copies of his treaty signaled the distrust of many citizens.

Jefferson was safely established on his plantation at Monticello, (having left Washington�s cabinet in 1794) when violence over the treaty erupted. Hamilton, though no longer serving in Washington�s cabinet, was in the middle of the fray. Whatever their feelings and temperaments, both men after much arguing and defending of their positions left Washington to finish out his second term and went their separate ways. Jefferson would go on to serve as President five years later, while Hamilton would be killed in a duel with Jefferson�s vice-president, Erin Burr. Hamilton�s greatest contribution to history may be his stabilization of the monetary system in the United States, even though the charter for his bank ran out in 1811.

The years from 1791 to 1798 were some of the roughest in American history, even after the adoption of a hard-fought Constitution. Issues of foreign policy, debt assumption, the placement of a seat of government and the establishment of a precedent for conducting affairs of state forged two separate responses: one which led toward industrialization and one which advocated for isolation from world affairs and a self-imposed retreat into agricultural existence. When looking at these issues and seeing how far we have come, it is interesting to see that American politics is still rifled with issues, which are defining the experiment of a Republican government. We haven�t come so far from those days, and the idea and principals of the men who fueled the differences are still with us, even if they manifest themselves in different issues today.

 

 

Copyright © 2003 Shelley J Alongi
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