It has been to me astonishing, how any man could have
doubted, at any period of our affairs, of the necessity of a
foreign loan.
doubted, at any period of our affairs, of the necessity of a
foreign loan.
Hamilton - 1834 - Life on Hamilton - v1
The ill success of our last attempt is stri-
king. Some have done a great deal; others little, or scarce-
ly any thing. The disputes about boundaries, &c. testify
how nattering a prospect^we have of future tranquillity, if
f we do not frame in time/a confederacy capable of deciding
\ the differences, and compelling the obedience of the respect-
ive members. \
The confederation, too, gives the power of the purse too
entirely to the state legislatures. It should provide perpe-
tual funds in the disposal of congress, by a land tax, poll tax,
or the like. All imposts upon commerce ought to be laid
by congress, and appropriated to their use; for without cer-
tain revenues, a government can have no power; that pow-
er which holds the purse strings absolutely, must rule. This
seems to be a medium, which, without making congress al-
together independent, will tend to give reality to its autho-
rity.
Another defect in our system is, want of method and
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? HAMILTON. 289
energy in the administration. This has partly resulted from
the other defect; but in a great degree from prejudice and
the want of a proper executive. Congress have kept the
power too much in their own hands, and have meddled
too much with details of every sort. Congress is properly
a deliberative corps, and it forgets itself when it attempts
to play the executive. It is impossible that a body, nume-
rous as it is, constantly fluctuating, can ever act with suffi-
cient decision, or with systemj Two thirds of the members,
one half the time, cannot know what has gone before them,
or what connexion the subject in hand has to what has been
transacted on former occasions. The members who have
been more permanent, will only give information that pro-
motes the side they espouse, in the present case, and will as
often mislead as enlighten. The variety of business must
distract, and the proneness of every assembly to debate,
must at all times delay.
y~ Lately, congress, convinced of these inconveniences, have
gone into the measure of appointing boards. But this is, in
my opinion, a bad plan. A single man, in each department
of the administration, would be greatly preferable. It would
give us a chance of more knowledge, more activity, more
responsibility, and, of course, more zeal and attention. --
Boards partake of a part of the inconveniences of larger as-
semblies ; -- their decisions are slower, their energy less,
their responsibility more diffused. They will not have the
same abilities and knowledge as an administration by single
men. Men of the first pretensions will not so readily en-
gage in them, because they will be less conspicuous, of less
importance, have less opportunity of distinguishing them-
selves. The members of boards will take less pains to in-
form themselves and arrive at eminence, because they have
fewer motives to do it. All these reasons conspire to give
a preference to the plan of vesting the great executive de-
partments of the state in the hands of individuals. As these
vol. I. 37
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? 290 THE LIFE OF
men will be, of course, at all times under the direction of
congress, we shall blend the advantages of a monarchy and
republic in one constitution. \
A question has been made, whether single men could be
found to undertake these offices. I think they could; be-
cause there would be then every thing to excite the ambi-
tion of candidates. But in order to this, congress, by their
manner of appointing them, and the line of duty marked
out, must show that they are in earnest in making these of-
fices, offices of real trust and importance.
I fear a little vanity has stood in the way of these arrange-
ments, as though they would lessen the importance of con-
gress, and leave them nothing to do. But they would have
precisely the same rights and powers as heretofore, happi-
ly disencumbered of the detail. They would have to in-
spect the conduct of their ministers, deliberate upon their
plans, originate others for the public good, -- only observ-
ing this rule, that they ought to consult their ministers, and
get all the information and advice they could from them, be-
fore they entered into any new measures, or made changes
in the old.
A third defect is, the fluctuating constitution of our army.
This has been a pregnant source of evil; -- all our military
misfortunes, three-fourths of our civil embarrassments, are
^__ to be ascribed to it. ) The General has so fully enumerated
the mischiefs, in a late letter to congress, that I could only
repeat what he has said, and will, therefore, refer you to
that letter.
The imperfect and unequal provision made for the army,
is a fourth defectiwhich you will find delineated in the same
letter. (Without a speedy change, the army must dissolve;
-- it is now a mob rather than an army, -- without cloth-
ing, without pay, without provision, without morals, with-
out discipline. We begin to hate the country for its neg-
lect of us; the country begins to hate us for our oppressions
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? HAMILTON. 291
of them. Congress have long been jealous of us; we have
now lost all confidence in them, and give the worst con-
struction to all they do. Held together by the slenderest
ties, we are ripening for a dissolution.
i_The present mode of supplying the army by state purchases
is not one of the least considerable defects of our system.
It is too precarious a dependence, because the states will ne-
ver be sufficiently impressed with our necessities. Each will
make its own ease a primary object, the supply of the ar-
my a secondary one. The variety of channels through
which the business is transacted, will multiply the number
of persons employed, and the opportunities of embezzling
public money. From the popular spirit on which most of
the governments turn, the state agents will be men of less
character and ability; nor will there be so rigid a responsi-
bility among them as there might easily be among those in
the employ of the continent; of course not so much dili-
gence, care, or economy. Very little of the money raised
in the several states will go into the continental treasury,
on pretence that it is all exhausted in providing the quotas
of supplies, and the public will be without funds for the
other demands of government. The expense will be ulti-
mately much greater, and the advantage much smaller.
We actually feel the insufficiency of this plan, and have
reason to dread, under it, a ruinous extremity of want.
These are the principal defects in the present system that
now occur to me. There are many inferior ones in the
organization of particular departments, and many errors
of administration, which might be pointed out; but the
task would be troublesome and tedious, and if we had once
remedied those I have mentioned, the others would not be
attended with much difficulty.
I shall now propose the remedies which appear to me
applicable to our circumstances, and necessary to extri-
cate our affairs from their present deplorable situation.
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? 292 TUB LIFE OF
The first step must be to give congress powers compe-
tent to the public exigencies. This may happen in two
ways: one by resuming and exercising the discretionary
powers I suppose to have been originally vested in them
for the safety of the states, and resting their conduct on the
candour of their countrymen and the necessity of the con-
juncture; the other, by calling immediately a contention
of all the states, with full authority to conclude finally upon
a general confederation, stating to them beforehand expli-
citly the evils arising from a want of power in congress,
and the impossibility of supporting the contest on its pre-
sent footing, that the delegates may come possessed of
proper sentiments, as well as proper authority, to give effi-
cacy to the meeting. Their commission should include a
right of vesting congress with the whole or a proportion of
the unoccupied lands, to be employed for the purpose of
raising a revenue, reserving the jurisdiction to the states by
whom they are granted.
The first plan, I expect, will be thought too bold an ex-
pedient by the generality of congress; and, indeed, their
practice hitherto has so rivetted the opinion of their want
of power, that the success of this experiment may very
well be doubted.
I see no objection to the other mode that has any weight
in competition with the reasons for it. The convention
. j vv* should assemble the first of November next; the sooner
the better; our disorders are too violent to admit of a com-
mon or lingering remedy. The reasons for which I re-
quire them to be vested with plenipotentiary authority are,
that the business may suffer no delay in the execution, and
may in reality come to effect. A convention may agree
upon a confederation; the states, individually, hardly ever
will. We must have one, at all events, and a vigorous
one, if we mean to succeed in the contest and be happy
hereafter. As I said before, to engage the states to com-
:
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? HAMIITON. 293
ply with this mode, congress ought to confess to them,
plainly and unanimously, the impracticability, of supporting
our affairs on the present footing, and without a solid co-
ercive union. (I ask that the convention should have a
power of vesting the whole or a part of the unoccupied
lands in congress, because it is necessary that body should
have some property, as a fund for the arrangements of
finance; and I know of no other kind that can be given
them. )
The confederation, in my opinion, should give congress aA
complete sovereignty; except as to that part of internal
police which relates to the rights of property and life
among individuals, and to raising money by internal taxes.
It is necessary that every thing belonging to this should be
regulated by the state legislatures. . Congress should have \
complete sovereignty in all that relates to war, peace, j
trade, finance; and to the management of foreign "affairs; I
the right of declaring war, of raising armies, officering, I
paying them, directing their motions in every respect; of
equipping fleets, and doing the same with them; of build-
ing fortifications, arsenals, magazines, &c. &c. ; of making
peace on such conditions as they think proper; of regulat-
ing trade, determining with what countries it shall be car-
ried on; granting indulgences; laying prohibitions on all
the articles of export or import; imposing duties, granting
bounties and premiums for raising, exporting, or importing;
and applying to their own use the product of these duties,
only giving credit to the states on whom they are raised
in the general account of revenues and expense; institut-
ing admiralty courts, &c. ; of coining money, establishing
banks on such terms, and with such privileges, as they
think proper; appropriating funds, and doing whatever
else relates to the operations of finance; transacting
every thing with foreign nations; making alliances, offen-
sive and defensive, treaties of commerce, &c. &c.
1
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? 294 THE LIFE OF
The confederation should provide certain perpetual reve-
nues, productive and easy of collection; a land tax, poll
tax, or the like, which, together with the duties on trade,
and the unlocated lands, would give congress a substantial
existence, and a stable foundation for their schemes of
finance. What more supplies were necessary, should be
occasionally demanded of the states, in the present mode of
quotas.
The second step I would recommend is, that congress
should instantly appoint the following great officers of
state: A Secretary for Foreign Affairs; a President of
; X. v1 ' War; a President of Marine; a Financier; a President of
(. v1,1 Trade; instead of this last, a Board of Trade may be pre-
ferable, as the regulations of trade are slow and guarded,
and require prudence and experience, (more than other
qualities,) for which boards are very well adapted.
Congress should choose for these offices, men of the first
abilities, property, and character, in the continent; and
such as have had the best opportunities of being acquainted
with the several branches. General Schuyler, whom you
mentioned, would make an excellent President of War;
General McDougal a very good President of Marine; Mr.
Robert Morris would have many things in his favour for
the department of Finance. He could, by his own per-
sonal influence, give great weight to the measures he should
adopt. I dare say, men equally capable may be found for
the other departments.
I know not if it would not be a good plan to let the Fi-
nancier be President of the Board of Trade; but he should
only have a casting voice in determining questions there.
There is a connexion between trade and finance, which
ought to make the director of one acquainted with the
other; but the financier should not direct the affairs of
trade, because, for the sake of acquiring reputation by in-
creasing the revenues, he might adopt measures that would
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? HAMILTON. 295
depress trade. In what relates to finance he should be
alone. ,
These officers should have nearly the same powers and
functions as those in France analogous to them, and each
should be chief in his department, with subordinate boards,
composed of assistants, clerks, &c. , to execute his orders.
In my opinion, a plan of this kind would be of inconceiv-
able utility to our affairs; its benefits would be very speed-
ily felt. It would give new life and energy to the opera-
tions of government. Business would be conducted with
despatch, method, and system. A million of abuses now
existing would be corrected, and judicious plans would be
formed and executed for the public good. .
K Another step of immediate necessity is, to recruit the
army for the war, or at least for three years. This must
be done by a mode similar to that which is practised in
Sweden. There the inhabitants are thrown into classes of
sixteen, and when the sovereign wants men, each of these
classes must furnish one. They raise a fixed sum of mo-
ney, and if one of the class is willing to become a soldier,
he receives the money and offers himself a volunteer; if
none is found to do this, a draft is made, and he on whom
the lot falls, receives the money, and is obliged to serve.
The minds of the people are prepared for a thing of this
kind; the heavy bounties they have been obliged to pay
for men to serve a few months, must have disgusted them
with this mode, and made them desirous of another, that
will, once for all, answer the public purposes, and obviate
a repetition of the demand. It ought by all means to be
attempted; and congress should frame a general plan, and
press the execution upon the states. When the confede-
ration comes to be framed, it ought to provide for this, by
a fundamental law ; and hereafter there would be no doubt
of the success. But we cannot now wait for this: we
want to replace the men whose times of service will ex-
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? 296 THE LIFE OF
(SP
pire the first of January; for then, without this, we shaH
have no army remaining, and the enemy may do what
they please. The General, in his letter already quoted,
has assigned the most substantial reasons for paying imme-
diate attention to this point.
Congress should endeavour, both upon their credit in Eu-
rope, and by every possible exertion in this country, to pro-
. -- ). - / vide clothing for their officers, and should abolish the whole
f^f system of state supplies. The making good the deprecia-
te fji tion of the currency, and all other compensations to the
i v? J>'v ! army, should be immediately taken up by congress, and
not left to the states; if they would have the accounts of
depreciation liquidated, and governmental certificates given
for what is due, in specie, or an equivalent to specie, it
would give satisfaction, appointing periodical settlements
for future depreciation.
The placing the officers upon half-pay, during life, would
be a great stroke of policy, and would give congress a
stronger tie upon them than any thing else they can do.
No man, that reflects a moment, but will prefer a perma-
nent provision of this kind, to any temporary compensa-
tion; nor is it opposed to economy; the difference between
this, and what has been already done, will be insignificant.
The benefit of it to the widows, should be confined to those
whose husbands die during the war. As to the survivors,
not more than one-half, on the usual calculation of men's
| ;t ? lives, will exceed the seven years for which the half-pay is
already established. Besides this, whatever may be the
visionary speculations of some men at this time, we shall
find it indispensable, after the war, to keep on foot a con-
siderable body of troops; and all the officers retained for
this purpose, must be deducted out of the half-pay list. If
any one will take the pains to calculate the expense on
these principles, I am persuaded he will find the addition
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? HAMILTON. 297
of expense from the establishment proposed, by no means
a national object.
The advantages of securing the attachment of the army
to congress, and binding them to the service, by substantial
ties, are immense.
We should, then, have discipline; an army in reality, as
well as in name. Congress would then have a solid basis
of authority and consequence; for with me it is an axiom,
that in our constitution an army is essential to the Ameri-
can union.
CThe providing of supplies, is the pivot of every thing
else; (though a well constituted army would not, in a small
degree, conduce to this, by giving consistency and weight
to government,) there are four ways, all which must be
united, -- a foreign loan, -- heavy pecuniary taxes, -- a
tax in kind, -- a bank founded on public and private credit;. '
As to a foreign loan, I dare say, congress are doing every
thing in their power to obtain it. The most effectual way
will be, to tell France that without it, we must make terms
with Great Britain. This must be done with plainness and
firmness,but with respect and without petulance; not as a me-
nace, but as a candid declaration of our circumstances. We
need not fear to be deserted by France; her interest and
honour are too deeply involved in our fate; and she can
make no possible compromise. She can assist us, if she is
convinced it is absolutely necessary, either by lending us,
herself, or by becoming our surety, or by influencing Spain.
It has been to me astonishing, how any man could have
doubted, at any period of our affairs, of the necessity of a
foreign loan. It was self-evident that we had not a fund
of wealth in this country, capable of affording revenues
equal to the expenses. We must, then, create artificial re-
venues, or borrow; the first was done, but it ought to have
been foreseen, that the expedient could not last, and we
should have provided in time for its failure.
vol. i. 38
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? THE LIFE OF
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f 'Here was an error of congress. I have good reason to
believe, that measures were not taken in earnest early
enough to procure a loan abroad: I give you my honour,
that from our first outset, I thought as I do now ; and wished
for a foreign loan, not only because I foresaw it would be
essential, but because I considered it a tie upon the nation
from which it was derived, and as a mean to prop our cause
in Europe.
u\ Concerning the necessity of heavy pecuniary taxes, I
need say nothing, as it is a point in which every body is
agreed; nor is there any danger, that the product of any
taxes raised in this way, will overburthen the people, or ex-
ceed the wants of the public. Indeed, if all the paper in
circulation were drawn annually into the treasury, it would
neither do one nor the other.
'Aa to a tax in kind, the necessity of it results from this
principle, -- that the money in circulation is not a sufficient
representative of the productions of the country, and conse-
quently no revenues raised from it, as a medium, can be
a competent representative of that part of the products
of the country, which it is bound to contribute to the support
of the public. J The public, therefore, to obtain its due, or
satisfy its just demands and its wants, must call for a part
of these products themselves. This is done in all those
countries which are not commercial; in Russia, Prussia,
Denmark, Sweden, &c. , and is peculiarly necessary in our
case.
Congress, in calling for specific supplies, seem to have
had this in view; but their intention has not been answer-
ed. The states, in general, have undertaken to furnish the
supplies by purchase, -- a mode, as I have observed, at-
tended with every inconvenience, and subverting the prin-
ciple on which the supplies were demanded,--the insuffi-
ciency of our circulating medium, as a representative for
the labour and commodities of the country. It is, there-
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? HAMILTON. 209
fore, necessary, that congress should be more explicit;
should form the outlines of a plan for a tax in kind, and re-
commend it to the states, as a measure of absolute neces-
sity.
The general idea I have of a plan is, that a respectable
man should be appointed by the state in each county to
collect the taxes, and form magazines ; that congress should
have in each state an officer to superintend the whole, and
that the state collectors should be subordinate and respon-
sible to them. This continental superintendent might be
subject to the general direction of the quarter-master-gene-
ral, or not, as might be deemed best; but if not subject to
him, he should be obliged to make monthly returns to the
President at War, who should instruct him what propor-
tion to deliver to the quarter-master-general. It may be
necessary, that the superintendents should sometimes have
power to dispose of the articles in their possession, on pub-
lic account; for it would happen, that the contributions,
in places remote from the army, could not be transported
to the theatre of operations without too great expense; in
which case, it would be eligible to dispose of them, and
purchase with the money so raised in the counties near the
immediate scene of war.
I know the objections which may be raised to this plan,
-- its tendency to discourage industry and the like; but
necessity calls for it; we cannot proceed without, and less
evils must give place to greater. It is, besides, practised
with success in other countries, and why not in this? It
may be said, the examples cited are from nations under
despotic governments, and that the same would not be
practicable with us; but I contend, where the public good
is evidently the object, more may be effected in govern-
ments like ours, than in any other. It has been a constant
remark, that free countries have ever paid the heaviest
taxes; the obedience of a free people to general laws, how-
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? 300 THE LIFE OF
iU
ever hard they bear, is ever more perfect than that of
slaves to the arbitrary will of a prince. To this, it may be
added, that Sweden was always a free government, and
is so now, in a great degree, notwithstanding the late re-
volution.
a-, , t /, y'i' How far it may be practicable to erect a bank on the faint
\ credit of the public, and of individuals, can only be certainly
t ^. ,v determined by the experiment; but it is of so much import-
ance that the experiment ought to be fully tried. When I
saw the subscriptions going on to the bank established for
supplying the army, I was in hopes it was only the embryo
of a more permanent and extensive establishment. But I
have reason to believe I shall be disappointed. It does not
seem to be at all conducted on the true principles of a bank.
The directors of it are purchasing with their stock, instead
of bank notes as I expected; in consequence of which, it
must turn out to be a mere subscription of a particular sum
of money, for a particular purpose.
Paper credit never was long supported in any country,
on a national scale, where it was not founded on the joint
basis of public and private credit. An attempt to establish
it on public credit alone, in France, under the auspices of
Mr. Law, nearly ruined the kingdom. We have seen the
effects of it in America; and every successive experiment
proves the futility of the attempt. Our new money is de-
preciating almost as fast as the old, though it has, in some
states, as real funds as paper money ever had. The rea-
son is, thai the moneyed men have not an immediate interest
to uphold its credit. They may even, in many ways, find
it their interest to undermine it. The only certain manner
to obtainapermanent paper credit, is to engage the moneyed
interest immediately in it, by making them contribute the
whole or part of the stock, and giving them the whole or
part of the profits.
The invention of banks, on the modern principle, origina-
P~
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? HAMILTON. 301
ted in Venice. There, the public, and a company of mo-
neyed men, are mutually concerned. The Bank of England . . 1 \ t>'
unites public authority and faith, with private credit; and . --. "' J. {.
hence we see what a vast fabric of paper credit is raised on'
a visionary basis. Had it not been for this, England would
never have found sufficient funds to carry on her wars; but
with the help of this, she has done, and is doing, wonders.
The Bank of Amsterdam is on a similar foundation.
And why cannot we have an American bank? Are our
moneyed men less enlightened to their own interest, or less
enterprising in the pursuit 1 I believe the fault is in go-
vernment, which does not exert itself to engage them in
such a scheme. It is true, the individuals in America are
not very rich; but this would not prevent their instituting
a bank; it would only prevent its being done with such
ample funds as in other countries. Have they not sufficient
confidence in the government, and in the issue of the cause?
Let the government endeavour to inspire that confidence,
by adopting the measures I have recommended, or others
equivalent to them. Let it exert itself to procure a solid
confederation, -- to establish a good plan of executive ad-
ministration,-- to form a permanent military force,--to ob-
tain, at all events, a foreign loan. If these things were in
a train of vigorous execution, it would give a new spring
to our affairs; government would recover its respectability,
and individuals would renounce their diffidence.
The object I should propose to myself, in the first in-
stance, from a bank, would be an auxiliary mode of sup-
plies; for which purpose contracts should be made between
government and the bank, on terms liberal and advanta-
geous t<j the latter. Every thing should be done, in the first
instance, to encourage the bank ; after it gets well establish-
ed, it will take care of itself, and government may make the
best terms it can for itself. -"\
The first step to establishing the bank, will be to engage j
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? 302 THE LIFE OF
a number of moneyed men of influence to relish the project,
and make it a business. The subscribers to that lately es-
tablished, are the fittest persons that can be found; and their
plan may be interwoven.
The outlines of my plan would be to open subscriptions,
in all the states, for the stock, which we will suppose to be
one million of pounds. Real property, of every kind, as
well as specie, should be deemed good stock; but at least
a fourth part of the subscription should be in specie or
plate. There should be one great company, in three di-
visions; in Virginia^ Philadelphia, and at Boston; or two,
at Philadelphia and Boston. The bank should have aright
to issue bank notes, bearing two per cent, interest for the
whole of their stock; but not to exceed it. These notes
may be payable every three months, or oftener; and the
faith of government must be pledged for the support of the
bank. It must, therefore, have a right, from time to time,
to inspect its operations; and must appoint inspectors for
the purpose.
The advantages of the bank may consist in this: in the
profits of the contracts made with government, which should
bear interest, to be annually paid in specie; in the loan of
money at interest, say six per cent. ; in purchasing lives by
annuities, as practised in England, &c. The benefit result-
ing to the company is evident, from the consideration, that
they may employ in circulation a great deal more money
than they have specie in stock, on the credit of the real
property which they will have in other use. This money
will be employed, either in fulfilling their contracts with
the public, by which, also, they will gain a profit, or in
loans, at an advantageous interest, or in annuities.
The bank may be allowed to purchase plate and bullion,
and coin money, allowing government a part of the profit.
I make the bank notes bear interest, to obtain a readier
currency, and to induce the holders to prefer them to spe-
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? HAMILTON. 303
cie, to prevent too great a run upon the bank, at any time,
beyond its ability to pay.
If government can obtain a foreign loan, it should lend to
the bank, on easy terms, to extend its influence, and facili-
tate a compliance with its engagements. If government
could engage the states to raise a sum of money in specie,
to be deposited in bank, in the same manner, it would be
of the greatest consequence. If government could prevail
on the enthusiasm of the people, to make a contribution in
plate, for the same purpose, it would be a master stroke.
Things of this kind sometimes succeed in popular contests;
and if undertaken with address, I should not despair of its
success; but I should not be sanguine.
The bank may be instituted for a term of years, by way
of trial; and the particular privilege of coining money be
for a term still shorter.
A temporary transfer of it to a particular company can
have no inconvenience, as the government are in no condi-
tion to improve this resource; nor could it, in our circum-
stances, be an object to it, though with the industry of a
knot of individuals, it might be a valuable one to them.
A bank of this kind, even in its commencement, would
answer the most valuable purposes to government, and to
the proprietors; in its progress, the advantages will exceed
calculation. It will promote commerce, by furnishing a
more extensive medium, which we greatly want, in our cir-
cumstances. I mean a more extensive, valuable medium.
We have an enormous nominal one at this time; but it is
only a name.
In the present unsettled state of things, in this country,
we can hardly draw inferences, from what has happened in
others; otherwise I should be certain of the success of this
scheme; but I think it has enough in its favour to be wor-
thy of trial.
I have only skimmed the surface of the different subjects
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? 304 THE LIFE OF
I have introduced. Should the plans recommended come
into contemplation in earnest, and you desire my farther
thoughts, I will endeavour to give them more form and
articularity.
I am persuaded a solid confederation, a permanent ar-
my, a reasonable prospect of subsisting it, would give us
treble consideration in Europe, and produce a peace this
winter.
If a convention is called, the minds of all the states and
the people ought to be prepared to receive its determina-
tions by sensible and popular writings, which should conform
to the views of congress. There are epochs in human af-
fairs, when novelty even is useful. If a general opinion
prevails that the old way is bad, whether true or false, and
this obstructs or relaxes the operations of the public ser-
vice, a change is necessary if it be but for the sake of
change. This is exactly the case now. 'Tis an universal
sentiment that our present system is a bad one, and that
things do not go right on this account. The measure of a
convention would revive the hopes of the people, and give
a new direction to their passions, which may be improved
in carrying points of substantial utility. The eastern states
have already pointed out this mode to congress: they ought
to take the hint, and anticipate the others.
And in future, my dear sir, two things let me recommend,
as fundamental rules for the conduct of congress: to attach
the army to them by every motive, -- to maintain an au-
thority, (not domineering,) in all their measures with the
states. ) The manner in which a thing is done, has more in-
fluence than is commonly imagined. Men are governed
by opinion: this opinion is as much influenced by appear-
ances as by realities. If a government appears to be con-
fident of its own powers, it is the surest way to inspire the
same confidence in others. If it is diffident, it may be cer-
tain there will be a still greater diffidence in others, and
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? HAMILTON. 305
that its authority will not only be distrusted, controverted,
but contemned.
I wish, too, congress would always consider, that a kind-
ness consists as much in the manner as in the thing. The best
things, done hesitatingly, and with an ill grace, lose their
effect, and produce disgust rather than satisfaction or grati-
tude. In what congress have at any time done for the army,
they have commonly been too late. They have seemed to
yield to importunity, rather than to sentiments of justice, or
to a regard to the accommodation of their troops. An at-
tention to this idea is of more importance than it may be
thought. I, who have seen all the workings and progress
of the present discontents, am convinced that a want of
this has not been among the most inconsiderable causes.
You will perceive, my dear sir, this letter is hastily writ-
ten, and with a confidential freedom, not as to a member
of congress, whose feelings may be sore at the prevailing
clamour; but as to a friend, who is in a situation to remedy
public disorders,--who wishes for nothing so much as truth,
and who is desirous for information, even from those less
capable of judging than himself. I have not even time to
correct and copy,* and only enough to add, that I am, very
truly and affectionately, dear sir,
Your most obedient servant,
A. Hamilton.
Such were the plans which his extensive genius origi-
nated, to raise this country above all the chances of the revo-
lution, -- to give to it a national government, -- to call out
all its resources, and to relieve it from that entire depend-
ence on France, which, though not a native, he felt with all
a native's pride.
* For this document, the author is indebted to a connexion of Mr. Ihiane.
vol. i. 39
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? 306 TUB LIFE OF
This feeling is strongly indicated in the following letter
to congress from head quarters.
*****" We may soon be reduced to the humiliating
condition of seeing the cause of America, in America, up-
held by foreign arms. The generosity of our allies has a
claim to all our confidence and all our gratitude; but it is
neither for the honour of America, nor for the interest of
the common cause, to leave the work entirely to them. "
The measures thus suggested by Hamilton, were before
the times. His remark, that the people were proof against
experience, was too true; and the moment when a govern-
ment, possessing all the energies necessary for its own pre-
servation, and all the checks essential to freedom, might
have been formed, passed away.
A short time after this subject was brought before con-
gress, the news of the defeat of Gates, at Camden, was re-
ceived, and a deeper gloom was spread over the public
mind, now sadly disappointed in the fond hopes which had
been indulged, of the benefits to be derived from the co-
operation of France. Hamilton thus speaks of this event,
in a letter of the sixth of September, written to a near friend
in perfect confidence.
"Most people here are groaning under a very disagree-
able piece of intelligence, just come from the southward,
that Gates has had a total defeat near Camden, in South
Carolina. Cornwallis and he met in the night of the fif-
teenth, by accident, marching to the same point. The ad-
vanced guards skirmished, and the two armies halted and
formed till morning. In the morning a battle ensued, in
which the militia, and Gates with them, immediately ran
away, and left the continental troops to contend with the
enemy's whole force.
king. Some have done a great deal; others little, or scarce-
ly any thing. The disputes about boundaries, &c. testify
how nattering a prospect^we have of future tranquillity, if
f we do not frame in time/a confederacy capable of deciding
\ the differences, and compelling the obedience of the respect-
ive members. \
The confederation, too, gives the power of the purse too
entirely to the state legislatures. It should provide perpe-
tual funds in the disposal of congress, by a land tax, poll tax,
or the like. All imposts upon commerce ought to be laid
by congress, and appropriated to their use; for without cer-
tain revenues, a government can have no power; that pow-
er which holds the purse strings absolutely, must rule. This
seems to be a medium, which, without making congress al-
together independent, will tend to give reality to its autho-
rity.
Another defect in our system is, want of method and
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? HAMILTON. 289
energy in the administration. This has partly resulted from
the other defect; but in a great degree from prejudice and
the want of a proper executive. Congress have kept the
power too much in their own hands, and have meddled
too much with details of every sort. Congress is properly
a deliberative corps, and it forgets itself when it attempts
to play the executive. It is impossible that a body, nume-
rous as it is, constantly fluctuating, can ever act with suffi-
cient decision, or with systemj Two thirds of the members,
one half the time, cannot know what has gone before them,
or what connexion the subject in hand has to what has been
transacted on former occasions. The members who have
been more permanent, will only give information that pro-
motes the side they espouse, in the present case, and will as
often mislead as enlighten. The variety of business must
distract, and the proneness of every assembly to debate,
must at all times delay.
y~ Lately, congress, convinced of these inconveniences, have
gone into the measure of appointing boards. But this is, in
my opinion, a bad plan. A single man, in each department
of the administration, would be greatly preferable. It would
give us a chance of more knowledge, more activity, more
responsibility, and, of course, more zeal and attention. --
Boards partake of a part of the inconveniences of larger as-
semblies ; -- their decisions are slower, their energy less,
their responsibility more diffused. They will not have the
same abilities and knowledge as an administration by single
men. Men of the first pretensions will not so readily en-
gage in them, because they will be less conspicuous, of less
importance, have less opportunity of distinguishing them-
selves. The members of boards will take less pains to in-
form themselves and arrive at eminence, because they have
fewer motives to do it. All these reasons conspire to give
a preference to the plan of vesting the great executive de-
partments of the state in the hands of individuals. As these
vol. I. 37
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? 290 THE LIFE OF
men will be, of course, at all times under the direction of
congress, we shall blend the advantages of a monarchy and
republic in one constitution. \
A question has been made, whether single men could be
found to undertake these offices. I think they could; be-
cause there would be then every thing to excite the ambi-
tion of candidates. But in order to this, congress, by their
manner of appointing them, and the line of duty marked
out, must show that they are in earnest in making these of-
fices, offices of real trust and importance.
I fear a little vanity has stood in the way of these arrange-
ments, as though they would lessen the importance of con-
gress, and leave them nothing to do. But they would have
precisely the same rights and powers as heretofore, happi-
ly disencumbered of the detail. They would have to in-
spect the conduct of their ministers, deliberate upon their
plans, originate others for the public good, -- only observ-
ing this rule, that they ought to consult their ministers, and
get all the information and advice they could from them, be-
fore they entered into any new measures, or made changes
in the old.
A third defect is, the fluctuating constitution of our army.
This has been a pregnant source of evil; -- all our military
misfortunes, three-fourths of our civil embarrassments, are
^__ to be ascribed to it. ) The General has so fully enumerated
the mischiefs, in a late letter to congress, that I could only
repeat what he has said, and will, therefore, refer you to
that letter.
The imperfect and unequal provision made for the army,
is a fourth defectiwhich you will find delineated in the same
letter. (Without a speedy change, the army must dissolve;
-- it is now a mob rather than an army, -- without cloth-
ing, without pay, without provision, without morals, with-
out discipline. We begin to hate the country for its neg-
lect of us; the country begins to hate us for our oppressions
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? HAMILTON. 291
of them. Congress have long been jealous of us; we have
now lost all confidence in them, and give the worst con-
struction to all they do. Held together by the slenderest
ties, we are ripening for a dissolution.
i_The present mode of supplying the army by state purchases
is not one of the least considerable defects of our system.
It is too precarious a dependence, because the states will ne-
ver be sufficiently impressed with our necessities. Each will
make its own ease a primary object, the supply of the ar-
my a secondary one. The variety of channels through
which the business is transacted, will multiply the number
of persons employed, and the opportunities of embezzling
public money. From the popular spirit on which most of
the governments turn, the state agents will be men of less
character and ability; nor will there be so rigid a responsi-
bility among them as there might easily be among those in
the employ of the continent; of course not so much dili-
gence, care, or economy. Very little of the money raised
in the several states will go into the continental treasury,
on pretence that it is all exhausted in providing the quotas
of supplies, and the public will be without funds for the
other demands of government. The expense will be ulti-
mately much greater, and the advantage much smaller.
We actually feel the insufficiency of this plan, and have
reason to dread, under it, a ruinous extremity of want.
These are the principal defects in the present system that
now occur to me. There are many inferior ones in the
organization of particular departments, and many errors
of administration, which might be pointed out; but the
task would be troublesome and tedious, and if we had once
remedied those I have mentioned, the others would not be
attended with much difficulty.
I shall now propose the remedies which appear to me
applicable to our circumstances, and necessary to extri-
cate our affairs from their present deplorable situation.
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? 292 TUB LIFE OF
The first step must be to give congress powers compe-
tent to the public exigencies. This may happen in two
ways: one by resuming and exercising the discretionary
powers I suppose to have been originally vested in them
for the safety of the states, and resting their conduct on the
candour of their countrymen and the necessity of the con-
juncture; the other, by calling immediately a contention
of all the states, with full authority to conclude finally upon
a general confederation, stating to them beforehand expli-
citly the evils arising from a want of power in congress,
and the impossibility of supporting the contest on its pre-
sent footing, that the delegates may come possessed of
proper sentiments, as well as proper authority, to give effi-
cacy to the meeting. Their commission should include a
right of vesting congress with the whole or a proportion of
the unoccupied lands, to be employed for the purpose of
raising a revenue, reserving the jurisdiction to the states by
whom they are granted.
The first plan, I expect, will be thought too bold an ex-
pedient by the generality of congress; and, indeed, their
practice hitherto has so rivetted the opinion of their want
of power, that the success of this experiment may very
well be doubted.
I see no objection to the other mode that has any weight
in competition with the reasons for it. The convention
. j vv* should assemble the first of November next; the sooner
the better; our disorders are too violent to admit of a com-
mon or lingering remedy. The reasons for which I re-
quire them to be vested with plenipotentiary authority are,
that the business may suffer no delay in the execution, and
may in reality come to effect. A convention may agree
upon a confederation; the states, individually, hardly ever
will. We must have one, at all events, and a vigorous
one, if we mean to succeed in the contest and be happy
hereafter. As I said before, to engage the states to com-
:
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? HAMIITON. 293
ply with this mode, congress ought to confess to them,
plainly and unanimously, the impracticability, of supporting
our affairs on the present footing, and without a solid co-
ercive union. (I ask that the convention should have a
power of vesting the whole or a part of the unoccupied
lands in congress, because it is necessary that body should
have some property, as a fund for the arrangements of
finance; and I know of no other kind that can be given
them. )
The confederation, in my opinion, should give congress aA
complete sovereignty; except as to that part of internal
police which relates to the rights of property and life
among individuals, and to raising money by internal taxes.
It is necessary that every thing belonging to this should be
regulated by the state legislatures. . Congress should have \
complete sovereignty in all that relates to war, peace, j
trade, finance; and to the management of foreign "affairs; I
the right of declaring war, of raising armies, officering, I
paying them, directing their motions in every respect; of
equipping fleets, and doing the same with them; of build-
ing fortifications, arsenals, magazines, &c. &c. ; of making
peace on such conditions as they think proper; of regulat-
ing trade, determining with what countries it shall be car-
ried on; granting indulgences; laying prohibitions on all
the articles of export or import; imposing duties, granting
bounties and premiums for raising, exporting, or importing;
and applying to their own use the product of these duties,
only giving credit to the states on whom they are raised
in the general account of revenues and expense; institut-
ing admiralty courts, &c. ; of coining money, establishing
banks on such terms, and with such privileges, as they
think proper; appropriating funds, and doing whatever
else relates to the operations of finance; transacting
every thing with foreign nations; making alliances, offen-
sive and defensive, treaties of commerce, &c. &c.
1
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? 294 THE LIFE OF
The confederation should provide certain perpetual reve-
nues, productive and easy of collection; a land tax, poll
tax, or the like, which, together with the duties on trade,
and the unlocated lands, would give congress a substantial
existence, and a stable foundation for their schemes of
finance. What more supplies were necessary, should be
occasionally demanded of the states, in the present mode of
quotas.
The second step I would recommend is, that congress
should instantly appoint the following great officers of
state: A Secretary for Foreign Affairs; a President of
; X. v1 ' War; a President of Marine; a Financier; a President of
(. v1,1 Trade; instead of this last, a Board of Trade may be pre-
ferable, as the regulations of trade are slow and guarded,
and require prudence and experience, (more than other
qualities,) for which boards are very well adapted.
Congress should choose for these offices, men of the first
abilities, property, and character, in the continent; and
such as have had the best opportunities of being acquainted
with the several branches. General Schuyler, whom you
mentioned, would make an excellent President of War;
General McDougal a very good President of Marine; Mr.
Robert Morris would have many things in his favour for
the department of Finance. He could, by his own per-
sonal influence, give great weight to the measures he should
adopt. I dare say, men equally capable may be found for
the other departments.
I know not if it would not be a good plan to let the Fi-
nancier be President of the Board of Trade; but he should
only have a casting voice in determining questions there.
There is a connexion between trade and finance, which
ought to make the director of one acquainted with the
other; but the financier should not direct the affairs of
trade, because, for the sake of acquiring reputation by in-
creasing the revenues, he might adopt measures that would
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? HAMILTON. 295
depress trade. In what relates to finance he should be
alone. ,
These officers should have nearly the same powers and
functions as those in France analogous to them, and each
should be chief in his department, with subordinate boards,
composed of assistants, clerks, &c. , to execute his orders.
In my opinion, a plan of this kind would be of inconceiv-
able utility to our affairs; its benefits would be very speed-
ily felt. It would give new life and energy to the opera-
tions of government. Business would be conducted with
despatch, method, and system. A million of abuses now
existing would be corrected, and judicious plans would be
formed and executed for the public good. .
K Another step of immediate necessity is, to recruit the
army for the war, or at least for three years. This must
be done by a mode similar to that which is practised in
Sweden. There the inhabitants are thrown into classes of
sixteen, and when the sovereign wants men, each of these
classes must furnish one. They raise a fixed sum of mo-
ney, and if one of the class is willing to become a soldier,
he receives the money and offers himself a volunteer; if
none is found to do this, a draft is made, and he on whom
the lot falls, receives the money, and is obliged to serve.
The minds of the people are prepared for a thing of this
kind; the heavy bounties they have been obliged to pay
for men to serve a few months, must have disgusted them
with this mode, and made them desirous of another, that
will, once for all, answer the public purposes, and obviate
a repetition of the demand. It ought by all means to be
attempted; and congress should frame a general plan, and
press the execution upon the states. When the confede-
ration comes to be framed, it ought to provide for this, by
a fundamental law ; and hereafter there would be no doubt
of the success. But we cannot now wait for this: we
want to replace the men whose times of service will ex-
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? 296 THE LIFE OF
(SP
pire the first of January; for then, without this, we shaH
have no army remaining, and the enemy may do what
they please. The General, in his letter already quoted,
has assigned the most substantial reasons for paying imme-
diate attention to this point.
Congress should endeavour, both upon their credit in Eu-
rope, and by every possible exertion in this country, to pro-
. -- ). - / vide clothing for their officers, and should abolish the whole
f^f system of state supplies. The making good the deprecia-
te fji tion of the currency, and all other compensations to the
i v? J>'v ! army, should be immediately taken up by congress, and
not left to the states; if they would have the accounts of
depreciation liquidated, and governmental certificates given
for what is due, in specie, or an equivalent to specie, it
would give satisfaction, appointing periodical settlements
for future depreciation.
The placing the officers upon half-pay, during life, would
be a great stroke of policy, and would give congress a
stronger tie upon them than any thing else they can do.
No man, that reflects a moment, but will prefer a perma-
nent provision of this kind, to any temporary compensa-
tion; nor is it opposed to economy; the difference between
this, and what has been already done, will be insignificant.
The benefit of it to the widows, should be confined to those
whose husbands die during the war. As to the survivors,
not more than one-half, on the usual calculation of men's
| ;t ? lives, will exceed the seven years for which the half-pay is
already established. Besides this, whatever may be the
visionary speculations of some men at this time, we shall
find it indispensable, after the war, to keep on foot a con-
siderable body of troops; and all the officers retained for
this purpose, must be deducted out of the half-pay list. If
any one will take the pains to calculate the expense on
these principles, I am persuaded he will find the addition
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? HAMILTON. 297
of expense from the establishment proposed, by no means
a national object.
The advantages of securing the attachment of the army
to congress, and binding them to the service, by substantial
ties, are immense.
We should, then, have discipline; an army in reality, as
well as in name. Congress would then have a solid basis
of authority and consequence; for with me it is an axiom,
that in our constitution an army is essential to the Ameri-
can union.
CThe providing of supplies, is the pivot of every thing
else; (though a well constituted army would not, in a small
degree, conduce to this, by giving consistency and weight
to government,) there are four ways, all which must be
united, -- a foreign loan, -- heavy pecuniary taxes, -- a
tax in kind, -- a bank founded on public and private credit;. '
As to a foreign loan, I dare say, congress are doing every
thing in their power to obtain it. The most effectual way
will be, to tell France that without it, we must make terms
with Great Britain. This must be done with plainness and
firmness,but with respect and without petulance; not as a me-
nace, but as a candid declaration of our circumstances. We
need not fear to be deserted by France; her interest and
honour are too deeply involved in our fate; and she can
make no possible compromise. She can assist us, if she is
convinced it is absolutely necessary, either by lending us,
herself, or by becoming our surety, or by influencing Spain.
It has been to me astonishing, how any man could have
doubted, at any period of our affairs, of the necessity of a
foreign loan. It was self-evident that we had not a fund
of wealth in this country, capable of affording revenues
equal to the expenses. We must, then, create artificial re-
venues, or borrow; the first was done, but it ought to have
been foreseen, that the expedient could not last, and we
should have provided in time for its failure.
vol. i. 38
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? THE LIFE OF
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f 'Here was an error of congress. I have good reason to
believe, that measures were not taken in earnest early
enough to procure a loan abroad: I give you my honour,
that from our first outset, I thought as I do now ; and wished
for a foreign loan, not only because I foresaw it would be
essential, but because I considered it a tie upon the nation
from which it was derived, and as a mean to prop our cause
in Europe.
u\ Concerning the necessity of heavy pecuniary taxes, I
need say nothing, as it is a point in which every body is
agreed; nor is there any danger, that the product of any
taxes raised in this way, will overburthen the people, or ex-
ceed the wants of the public. Indeed, if all the paper in
circulation were drawn annually into the treasury, it would
neither do one nor the other.
'Aa to a tax in kind, the necessity of it results from this
principle, -- that the money in circulation is not a sufficient
representative of the productions of the country, and conse-
quently no revenues raised from it, as a medium, can be
a competent representative of that part of the products
of the country, which it is bound to contribute to the support
of the public. J The public, therefore, to obtain its due, or
satisfy its just demands and its wants, must call for a part
of these products themselves. This is done in all those
countries which are not commercial; in Russia, Prussia,
Denmark, Sweden, &c. , and is peculiarly necessary in our
case.
Congress, in calling for specific supplies, seem to have
had this in view; but their intention has not been answer-
ed. The states, in general, have undertaken to furnish the
supplies by purchase, -- a mode, as I have observed, at-
tended with every inconvenience, and subverting the prin-
ciple on which the supplies were demanded,--the insuffi-
ciency of our circulating medium, as a representative for
the labour and commodities of the country. It is, there-
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? HAMILTON. 209
fore, necessary, that congress should be more explicit;
should form the outlines of a plan for a tax in kind, and re-
commend it to the states, as a measure of absolute neces-
sity.
The general idea I have of a plan is, that a respectable
man should be appointed by the state in each county to
collect the taxes, and form magazines ; that congress should
have in each state an officer to superintend the whole, and
that the state collectors should be subordinate and respon-
sible to them. This continental superintendent might be
subject to the general direction of the quarter-master-gene-
ral, or not, as might be deemed best; but if not subject to
him, he should be obliged to make monthly returns to the
President at War, who should instruct him what propor-
tion to deliver to the quarter-master-general. It may be
necessary, that the superintendents should sometimes have
power to dispose of the articles in their possession, on pub-
lic account; for it would happen, that the contributions,
in places remote from the army, could not be transported
to the theatre of operations without too great expense; in
which case, it would be eligible to dispose of them, and
purchase with the money so raised in the counties near the
immediate scene of war.
I know the objections which may be raised to this plan,
-- its tendency to discourage industry and the like; but
necessity calls for it; we cannot proceed without, and less
evils must give place to greater. It is, besides, practised
with success in other countries, and why not in this? It
may be said, the examples cited are from nations under
despotic governments, and that the same would not be
practicable with us; but I contend, where the public good
is evidently the object, more may be effected in govern-
ments like ours, than in any other. It has been a constant
remark, that free countries have ever paid the heaviest
taxes; the obedience of a free people to general laws, how-
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? 300 THE LIFE OF
iU
ever hard they bear, is ever more perfect than that of
slaves to the arbitrary will of a prince. To this, it may be
added, that Sweden was always a free government, and
is so now, in a great degree, notwithstanding the late re-
volution.
a-, , t /, y'i' How far it may be practicable to erect a bank on the faint
\ credit of the public, and of individuals, can only be certainly
t ^. ,v determined by the experiment; but it is of so much import-
ance that the experiment ought to be fully tried. When I
saw the subscriptions going on to the bank established for
supplying the army, I was in hopes it was only the embryo
of a more permanent and extensive establishment. But I
have reason to believe I shall be disappointed. It does not
seem to be at all conducted on the true principles of a bank.
The directors of it are purchasing with their stock, instead
of bank notes as I expected; in consequence of which, it
must turn out to be a mere subscription of a particular sum
of money, for a particular purpose.
Paper credit never was long supported in any country,
on a national scale, where it was not founded on the joint
basis of public and private credit. An attempt to establish
it on public credit alone, in France, under the auspices of
Mr. Law, nearly ruined the kingdom. We have seen the
effects of it in America; and every successive experiment
proves the futility of the attempt. Our new money is de-
preciating almost as fast as the old, though it has, in some
states, as real funds as paper money ever had. The rea-
son is, thai the moneyed men have not an immediate interest
to uphold its credit. They may even, in many ways, find
it their interest to undermine it. The only certain manner
to obtainapermanent paper credit, is to engage the moneyed
interest immediately in it, by making them contribute the
whole or part of the stock, and giving them the whole or
part of the profits.
The invention of banks, on the modern principle, origina-
P~
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? HAMILTON. 301
ted in Venice. There, the public, and a company of mo-
neyed men, are mutually concerned. The Bank of England . . 1 \ t>'
unites public authority and faith, with private credit; and . --. "' J. {.
hence we see what a vast fabric of paper credit is raised on'
a visionary basis. Had it not been for this, England would
never have found sufficient funds to carry on her wars; but
with the help of this, she has done, and is doing, wonders.
The Bank of Amsterdam is on a similar foundation.
And why cannot we have an American bank? Are our
moneyed men less enlightened to their own interest, or less
enterprising in the pursuit 1 I believe the fault is in go-
vernment, which does not exert itself to engage them in
such a scheme. It is true, the individuals in America are
not very rich; but this would not prevent their instituting
a bank; it would only prevent its being done with such
ample funds as in other countries. Have they not sufficient
confidence in the government, and in the issue of the cause?
Let the government endeavour to inspire that confidence,
by adopting the measures I have recommended, or others
equivalent to them. Let it exert itself to procure a solid
confederation, -- to establish a good plan of executive ad-
ministration,-- to form a permanent military force,--to ob-
tain, at all events, a foreign loan. If these things were in
a train of vigorous execution, it would give a new spring
to our affairs; government would recover its respectability,
and individuals would renounce their diffidence.
The object I should propose to myself, in the first in-
stance, from a bank, would be an auxiliary mode of sup-
plies; for which purpose contracts should be made between
government and the bank, on terms liberal and advanta-
geous t<j the latter. Every thing should be done, in the first
instance, to encourage the bank ; after it gets well establish-
ed, it will take care of itself, and government may make the
best terms it can for itself. -"\
The first step to establishing the bank, will be to engage j
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? 302 THE LIFE OF
a number of moneyed men of influence to relish the project,
and make it a business. The subscribers to that lately es-
tablished, are the fittest persons that can be found; and their
plan may be interwoven.
The outlines of my plan would be to open subscriptions,
in all the states, for the stock, which we will suppose to be
one million of pounds. Real property, of every kind, as
well as specie, should be deemed good stock; but at least
a fourth part of the subscription should be in specie or
plate. There should be one great company, in three di-
visions; in Virginia^ Philadelphia, and at Boston; or two,
at Philadelphia and Boston. The bank should have aright
to issue bank notes, bearing two per cent, interest for the
whole of their stock; but not to exceed it. These notes
may be payable every three months, or oftener; and the
faith of government must be pledged for the support of the
bank. It must, therefore, have a right, from time to time,
to inspect its operations; and must appoint inspectors for
the purpose.
The advantages of the bank may consist in this: in the
profits of the contracts made with government, which should
bear interest, to be annually paid in specie; in the loan of
money at interest, say six per cent. ; in purchasing lives by
annuities, as practised in England, &c. The benefit result-
ing to the company is evident, from the consideration, that
they may employ in circulation a great deal more money
than they have specie in stock, on the credit of the real
property which they will have in other use. This money
will be employed, either in fulfilling their contracts with
the public, by which, also, they will gain a profit, or in
loans, at an advantageous interest, or in annuities.
The bank may be allowed to purchase plate and bullion,
and coin money, allowing government a part of the profit.
I make the bank notes bear interest, to obtain a readier
currency, and to induce the holders to prefer them to spe-
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? HAMILTON. 303
cie, to prevent too great a run upon the bank, at any time,
beyond its ability to pay.
If government can obtain a foreign loan, it should lend to
the bank, on easy terms, to extend its influence, and facili-
tate a compliance with its engagements. If government
could engage the states to raise a sum of money in specie,
to be deposited in bank, in the same manner, it would be
of the greatest consequence. If government could prevail
on the enthusiasm of the people, to make a contribution in
plate, for the same purpose, it would be a master stroke.
Things of this kind sometimes succeed in popular contests;
and if undertaken with address, I should not despair of its
success; but I should not be sanguine.
The bank may be instituted for a term of years, by way
of trial; and the particular privilege of coining money be
for a term still shorter.
A temporary transfer of it to a particular company can
have no inconvenience, as the government are in no condi-
tion to improve this resource; nor could it, in our circum-
stances, be an object to it, though with the industry of a
knot of individuals, it might be a valuable one to them.
A bank of this kind, even in its commencement, would
answer the most valuable purposes to government, and to
the proprietors; in its progress, the advantages will exceed
calculation. It will promote commerce, by furnishing a
more extensive medium, which we greatly want, in our cir-
cumstances. I mean a more extensive, valuable medium.
We have an enormous nominal one at this time; but it is
only a name.
In the present unsettled state of things, in this country,
we can hardly draw inferences, from what has happened in
others; otherwise I should be certain of the success of this
scheme; but I think it has enough in its favour to be wor-
thy of trial.
I have only skimmed the surface of the different subjects
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? 304 THE LIFE OF
I have introduced. Should the plans recommended come
into contemplation in earnest, and you desire my farther
thoughts, I will endeavour to give them more form and
articularity.
I am persuaded a solid confederation, a permanent ar-
my, a reasonable prospect of subsisting it, would give us
treble consideration in Europe, and produce a peace this
winter.
If a convention is called, the minds of all the states and
the people ought to be prepared to receive its determina-
tions by sensible and popular writings, which should conform
to the views of congress. There are epochs in human af-
fairs, when novelty even is useful. If a general opinion
prevails that the old way is bad, whether true or false, and
this obstructs or relaxes the operations of the public ser-
vice, a change is necessary if it be but for the sake of
change. This is exactly the case now. 'Tis an universal
sentiment that our present system is a bad one, and that
things do not go right on this account. The measure of a
convention would revive the hopes of the people, and give
a new direction to their passions, which may be improved
in carrying points of substantial utility. The eastern states
have already pointed out this mode to congress: they ought
to take the hint, and anticipate the others.
And in future, my dear sir, two things let me recommend,
as fundamental rules for the conduct of congress: to attach
the army to them by every motive, -- to maintain an au-
thority, (not domineering,) in all their measures with the
states. ) The manner in which a thing is done, has more in-
fluence than is commonly imagined. Men are governed
by opinion: this opinion is as much influenced by appear-
ances as by realities. If a government appears to be con-
fident of its own powers, it is the surest way to inspire the
same confidence in others. If it is diffident, it may be cer-
tain there will be a still greater diffidence in others, and
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? HAMILTON. 305
that its authority will not only be distrusted, controverted,
but contemned.
I wish, too, congress would always consider, that a kind-
ness consists as much in the manner as in the thing. The best
things, done hesitatingly, and with an ill grace, lose their
effect, and produce disgust rather than satisfaction or grati-
tude. In what congress have at any time done for the army,
they have commonly been too late. They have seemed to
yield to importunity, rather than to sentiments of justice, or
to a regard to the accommodation of their troops. An at-
tention to this idea is of more importance than it may be
thought. I, who have seen all the workings and progress
of the present discontents, am convinced that a want of
this has not been among the most inconsiderable causes.
You will perceive, my dear sir, this letter is hastily writ-
ten, and with a confidential freedom, not as to a member
of congress, whose feelings may be sore at the prevailing
clamour; but as to a friend, who is in a situation to remedy
public disorders,--who wishes for nothing so much as truth,
and who is desirous for information, even from those less
capable of judging than himself. I have not even time to
correct and copy,* and only enough to add, that I am, very
truly and affectionately, dear sir,
Your most obedient servant,
A. Hamilton.
Such were the plans which his extensive genius origi-
nated, to raise this country above all the chances of the revo-
lution, -- to give to it a national government, -- to call out
all its resources, and to relieve it from that entire depend-
ence on France, which, though not a native, he felt with all
a native's pride.
* For this document, the author is indebted to a connexion of Mr. Ihiane.
vol. i. 39
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? 306 TUB LIFE OF
This feeling is strongly indicated in the following letter
to congress from head quarters.
*****" We may soon be reduced to the humiliating
condition of seeing the cause of America, in America, up-
held by foreign arms. The generosity of our allies has a
claim to all our confidence and all our gratitude; but it is
neither for the honour of America, nor for the interest of
the common cause, to leave the work entirely to them. "
The measures thus suggested by Hamilton, were before
the times. His remark, that the people were proof against
experience, was too true; and the moment when a govern-
ment, possessing all the energies necessary for its own pre-
servation, and all the checks essential to freedom, might
have been formed, passed away.
A short time after this subject was brought before con-
gress, the news of the defeat of Gates, at Camden, was re-
ceived, and a deeper gloom was spread over the public
mind, now sadly disappointed in the fond hopes which had
been indulged, of the benefits to be derived from the co-
operation of France. Hamilton thus speaks of this event,
in a letter of the sixth of September, written to a near friend
in perfect confidence.
"Most people here are groaning under a very disagree-
able piece of intelligence, just come from the southward,
that Gates has had a total defeat near Camden, in South
Carolina. Cornwallis and he met in the night of the fif-
teenth, by accident, marching to the same point. The ad-
vanced guards skirmished, and the two armies halted and
formed till morning. In the morning a battle ensued, in
which the militia, and Gates with them, immediately ran
away, and left the continental troops to contend with the
enemy's whole force.
