Financial History Issue 119 (Fall 2016) | Page 21
a loan that year from France, which, as
Hamilton foresaw, wanted to destabilize
Britain. Morris used the loan to purchase
most of the bank’s shares for the US
government, a necessity because private
investors, given the shakiness of America’s
finances, largely refrained from buying the
shares that Morris offered.
The bank opened in Philadelphia in 1782
and offered considerable aid to the government during the two-year transition
from war to peace. Morris then sold the
government’s shares to private investors,
and the Bank of North America continued
as an ordinary commercial bank.8
Courtesy Wikimedia Foundation
Reprinted with permission from Alexander
Hamilton: The Illustrated Biography, text
© 2016 by Richard Sylla, Sterling Publishing Co., Inc.
Dr. Richard Sylla is the chairman of the
Museum of American Finance and was
formerly the Henry Kaufman Professor
of the History of Financial Institutions
and Markets at the NYU Stern School of
Business. He is one of the nation’s leading
Hamilton scholars.
$3 Continental Currency note, 1776.
for example, which seemed so obvious to
Hamilton and to a businessman such as
Morris that it “needs no discussion”—
although in America, as elsewhere, few
corporations existed then.
The National Debt
The letter ends with a brief look at the
national debt once the war ended. It
wouldn’t pose a problem, Hamilton said,
because good financial administration and
the country’s growth would enable America to pay the debt in a matter of decades.
In fact, the debt had benefits:
A national debt if it is not excessive
will be to us a national blessing; it will
be a powerful cement of our union. It
will also create a necessity for keeping
up taxation to a degree which without
being oppressive, will be a spur to
industry.…We labor less now than
any civilized nation of Europe, and a
habit of labor in the people is as essential to the health and vigor of their
minds and bodies as it is conducive to
the welfare of the State. We ought not
to suffer our self-love to deceive us in a
comparison upon these points.7
Here we catch a glimpse of one reason that Hamilton later became the least
loved of the founders. He spoke his mind
frankly, in this case saying that he didn’t
think Americans worked very hard. If they
had to pay taxes to service the national
debt incurred as the price of their liberty, they would have an incentive to
work harder. To Hamilton, that was good
for them and the country regardless of
whether they liked it.
The letter to Morris was a private communication, but it shows the same candor
that marks Hamilton’s public speeches
and writings. His often polemical public work, whether over his own name
or various pseudonyms, provoked strong
reactions — both favorable and unfavorable. The other founders paid greater
heed to what they said and wrote as it
affected their public images. This tendency
haunted Hamilton in later years.
Morris replied to Hamilton that he
had been thinking along similar lines,
although the Bank of North America that
he proposed had a less ambitious scale and
scope than the national bank that Hamilton recommended. Much of the capital
for the Bank of North America — which
Congress chartered in 1781 — came from
Notes
1.
Alexander Hamilton, “The Continentalist
No. III,” Papers of Alexander Hamilton,
vol. II, p. 661.
2.
We know neither the exact date nor the
addressee — likely a member of Congress — of this letter. Only the draft of the
letter exists in the Hamilton Papers at the
Library of Congress.
3.
Papers of Alexander Hamilton, vol. II, p.
245–45.
4.
Papers of Alexander Hamilton, vol. II, p.
248.
5.
Papers of Alexander Hamilton, vol. II, p.
606.
6.
Papers of Alexander Hamilton, vol. II, p.
618.
7.
Papers of Alexander Hamilton, vol. II, p.
635.
8.
After a number of mergers over the years,
America’s first bank now forms part of
Wells Fargo.
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