Joseph J. Ellis (11 page)

If you read Madison’s correspondence during this same time, you get the strong impression that the problem went much deeper than any shuffling of account books could ever satisfy. The economic injustice toward Virginia and most of the southern states—South Carolina was the exception, since it had not retired much of its debt—was bad enough. But assumption was symptomatic of malevolent tendencies that transcended mere dollars and cents. It was about power. Under the guise of doing the states a favor by assuming their debts, the federal government was implicitly, even covertly, assuming sovereign authority over the economies of all the states. As Madison put it to Jefferson in his most typically elliptical style, assumption “would be peculiarly hard on Virginia,” but was “further objectionable as augmenting a trust already sufficiently great for the virtue and number of the federal Legislature.” Virginia, in short, was being asked to trust its fate to the collective wisdom and virtue of the central government. Assumption, as Madison came to regard it, was not primarily about money. It was about control, about trust, about independence.
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These were all major chords in a revolutionary melody that most Virginians knew by heart. Henry Lee, for example, apprised Madison that the assumption debate reminded him of those glorious days of yesteryear, when the Virginia Assembly refused to recognize Parliament’s right to tax colonies. “It seems to me,” Lee wrote, “that we southern people must be slaves in effect, or cut the Gordion knot at once.” The radical rhetoric of the 1760s and 1770s, now hallowed by its association with the successful war for independence, came pouring out of Madison’s correspondents in Virginia, equating assumption with the Stamp Act, the federal Congress with Parliament, the so-called “fixed insolent northern majority” with Great Britain. “How do you feel?” Lee asked Madison rhetorically: “Is your love for the constitution so ardent … that it should produce ruin to your native country?” By “native country,” Lee meant Virginia.
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The entire atmosphere surrounding the assumption debate had become electromagnetic. And Madison, who had a justifiable reputation
for making himself the calm center in the midst of all political storms, was being buffeted by shrill accusations from both sides. Northern congressmen, led by Fisher Ames of Massachusetts, accused him of threatening the survival of the republic by blocking the centerpiece of Hamilton’s fiscal program, without which, they believed, the union would dissolve. Southerners, chiefly Virginians, were telling him that assumption demonstrated how prophetic the Antifederalist enemies to the Constitution now looked, and how his previous assurances in the Virginia ratifying convention and
The Federalist Papers
, assurances that the Constitution would prove a culmination rather than a betrayal of the American Revolution, now seemed like false promises.

The word that captured the essence of the Virginians’ political mentality was
consolidation
, as in “the dreaded consolidation that was denied by the friends of the new government, when it was under consideration.” The term conveyed the political fear, so potent among the Antifederalist critics of the constitutional settlement of 1788, that the states would be absorbed by the new federal government. It echoed the ideological fear, so effective as a weapon against the taxes imposed by Parliament and decrees of George III, that once arbitrary power was acknowledged to reside elsewhere, all liberty was lost. And at a primal level it suggested the unconscious fear of being swallowed up by a larger creature, the terror of being completely consumed, eaten alive. If Madison had ever managed to convince himself that these historically sanctioned fears had been banished with the creation of the new national government, the debate over assumption demonstrated that they were still very much alive. Indeed, because of their historical and rhetorical association with the successful war against British imperialism, they were the most potent forces in the entire political culture.
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What Madison actually thought about the most frantic expressions of Virginian mistrust is difficult to know. Along with John Adams, Madison was America’s most astute student of the role of the passions as a political force. But, unlike Adams, Madison’s mastery of his own passions took the form of total suppression. His letters back home to Virginia tended to endorse the legitimacy of the threat posed by assumption, but also to counsel patience, to urge, as much by their tone as the content, a less apocalyptic attitude. Hamilton’s fiscal program was certainly a menacing shadow over the new federal edifice. But talk of secession was premature and counterproductive. After all,
with Washington as president, Jefferson as secretary of state, Edmund Randolph as attorney general—he might have added Madison as dominant presence in the Congress—Virginia’s interests were hardly unrepresented in the capital. As for the threatening insults from their northern brethren in the government, pay them little attention. “We shall risk their prophetic menaces,” he noted confidently, “if we should continue to have a majority.” For on assumption, unlike the earlier debate over funding, Madison had the votes. Assumption would never pass.
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I
T GOES WITHOUT
saying that Alexander Hamilton’s understanding of the issues raised by his fiscal program, and the Virginia-writ-large squadrons that were mobilizing south of the Potomac to oppose it, was blissfully free of all the Madisonian ambiguities. Once Hamilton encountered a major obstacle to the advancement of any cause in which he believed, he instinctively hurled himself onto the offensive, never looked back, and waited for no stragglers. Whether the objective was a British parapet at Yorktown, the admiration of the legal and merchant elite in New York, or the ratification of the Constitution, Hamilton’s pattern was the same: to unleash his formidable energies in great bursts of conspicuous productivity; imposing his own personality on events in an ostentatious, out-of-my-way style that was precisely the opposite of Madison’s preference for stealth; irritating more modest and cautious colleagues with his casual presumption that both his overall vision and his mastery of the details were self-evidently superior; irritating them even more when events generally proved him right.

Critics of his take-charge temperament and his dashing Hamilton-to-the-rescue demeanor would make a plausible case that they were excessive compensations for his lowly (indeed bastardly) origins. Some biographers, pursuing the same interpretive line, have suggested that his deep-rooted insecurities drove him onto the plains of Weehawken and then into the fatal gaze of Aaron Burr. But if insecurity was the primal source of Hamilton’s incredible energy, one would have to conclude that providence had conspired to produce at the most opportune moment perhaps the most creative liability in American history.
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Like Madison in 1790, Hamilton was at the peak of his powers. He wrote the forty thousand words of his
Report on the Public Credit
in a
three-month surge and with the same kind of desperate speed he had turned out his fifty-one contributions to
The Federalist Papers
. Scholars on the lookout for the theoretical sources that may have shaped his thinking have invariably discovered multiple influences: Adam Smith, Jacques Necker, Malachai Postlethwayt, and David Hume top the list, with Hume a particularly forceful influence on the contours of his thinking about the dynamics of economic growth (much as Hume influenced Madison’s thinking about the dynamics of political stability). It is also well established that Hamilton’s intense dedication to a centralized solution to the fiscal problems facing the new government emerged, again like Madison’s, out of his frustrating experience with the inadequate and hopelessly divided authority of the Confederation government in the 1780s. Finally, the historic significance of Hamilton’s
Report
has attracted the attention of specialists in sufficient number to inject a technical dimension into the appraisal—familiarity with sinking funds, tontines, floating rates of interest, and liquidity has become essential for a full appreciation of his economic proficiency.
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All well and good, but for our purposes these otherwise-valuable insights are mere subplots almost designed to carry us down side trails while blithely humming a tune about the rough equivalence of forests and trees. What Hamilton thought he was doing was essentially simple: The economy of the United States was a tangled mess of foreign and domestic debt that he was determined to unravel, then place on firm fiscal footing by restoring public credit. All this was to be achieved with a keen and shrewd appreciation for the dynamic potential of America’s latent commercial energies, but unencumbered by even the slightest concern with how the resultant system might appear to those not sharing his nationalist vision.

On the question of funding the domestic debt, for example, Hamilton regarded Madison’s proposal to distinguish between original and present holders of government securities as naïve and mischievous. To be sure, some injustice might be done the wartime veterans. But who was Madison to lecture him about the venerable sacrifice made by American soldiers, Madison having never fired a shot in anger, now wrapping himself in some rhetorical rendition of the bloodstained uniform he had never worn? More to the point, the original holders had not been coerced to sell. They had done so freely and for an infinite variety of reasons. Sorting out the multiple transactions, prices, and
motives would be an administrative nightmare. Indeed, anyone proposing such a course must come under suspicion as a devotee of paralysis. The whole point of the funding scheme was to move past such ambiguous entanglements, to establish the kind of clear and discernible reimbursement policy that inspired trust, and to concentrate the debt in those hands most likely to use it in the interests of the community’s productivity and growth.
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On the question of assuming the state debts, Madison’s opposition struck Hamilton as even more illogical and blatantly sinister. Had not Madison himself advocated the assumption of state debts on several occasions in the 1780s? Had not they locked arms together as “Publius” to justify the need for a national government with sovereign power over the states? Indeed, had not Madison been the most ardent advocate at the Constitutional Convention for a clear assertion of federal sovereignty? Of course there were massive accounting problems in calculating the different state debts, not the least of the difficulties being sloppy records kept by several southern states, with Virginia topping the list for administrative disarray. But the final numbers were hardly set in stone. If Virginia wanted to negotiate these calculations, well, it was the kind of thing that could always be worked out among friends.

But friends did not make ominous charges that the whole assumption proposal was a plot to lure the states into some Faustian bargain in which they lost the political semblance of childlike innocence, an innocence in fact already abandoned, wisely so, when the Constitution was ratified. Assumption was not a plot to destroy the political integrity of the states; it was a plan to consolidate their debts and nationalize the economy for the benefit of all. Hamilton simply took it for granted that the new government created by the Constitution was, as he phrased it in his
Report
, “cloathed with powers competent to calling for the resources of the community”; and he, as the officer responsible for fiscal policy, was simply the chosen instrument to implement this collective effort.
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Therein lay the problem, and not just because Madison and his Virginia constituents heard such words as
consolidate
and
nationalize
like alarm bells in the night; or, as one of Hamilton’s fondest biographers put it, because the secretary of the treasury was “more adept at meeting financial crises than mending political fences.” The real difficulty was that Hamilton’s plan was very much a projection of his own audacious
personality. In fact, once one steps back from the specific provisions for calculating and funding the various state and federal debts, perhaps the best way to understand the grand design of Hamilton’s
Report
, and the implicit presumptions that animated its visionary sense of where the new American republic was heading, is to see it as Hamilton’s distinctive temperament and cast of mind superimposed on the fluid conditions of an emergent nation.
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First, there is the implication, floating between the lines of the entire
Report
, that an authoritative new presence has appeared on the scene and taken charge. The command ethos went beyond matters of personality (though Hamilton was certainly auditioning for the part), and it even went beyond questions of constitutionality (though the
Report
certainly announced the unequivocal sovereignty of the federal government). More sweepingly, it suggested that the enormous but latent potential of the American economy required more than mere release to achieve its full potential. Hamilton was hardly unique in his recognition that the vast resources of the North American continent constituted a repository of riches that, once unlocked, offered prospects of unparalleled prosperity and national destiny. He was, however, distinctive for his sense that the mobilization of these resources required abiding management and strategic orchestration at the national level. Madison, and to an even greater extent Jefferson, seemed to think that economic policy consisted of getting out of the way to allow the natural laws of economic recovery and growth to proceed. But Hamilton thought the conditions for economic development needed to be created, then enduringly overseen. His model was England, with its national bank, regulated commerce, and powerful finance ministers. From the perspective south of the Potomac, of course, these were the institutions and symbols the American Revolution had supposedly repudiated forever.

Second, there is the Hamiltonian confidence that the concentration of political and economic power was a dynamic force; it was not a threatening cluster of invasive corruption, but a synergistic fusion of developmental energies. Hamilton was tone-deaf to the familiar refrains in the republican song about the inherent evil of aggregated power, a tune that the emerging chorus of dissenters in Virginia was replaying under the new label of “consolidation.” For Hamilton, consolidation was a wonderful idea. While Madison’s frame of reference
was instinctively political, and idealized the dispersal of power naturally checked by the inherent diversity of diffused interest groups, Hamilton’s cast of mind was instinctively economic. He visualized the concentration of capital in the hands of a select few as the essential precondition for commercial investment and economic growth. One of the reasons he did not mind if original holders of government securities sold out to speculators was that he preferred to see the money in fewer hands. When money was spread out, it was only money. When concentrated, it was capital. And the main reason he welcomed the enlargement of the federal debt produced by assuming the state debts was that, once properly funded, it enlarged the pool of government credit for investment purposes by the wealthy few who held the notes. In this limited sense at least, Hamilton regarded the national debt as “a national blessing,” for it permitted the clustering of resources in the hands of a small group of enterprising men who would invest and not just spend it. For Madison, on the other hand, “a Public Debt is a Public curse,” and “in a Representative Government greater than in any other.”
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