Hamilton thought the inquiry beyond the province of the committee, but wishing to be prepared, if they should decide otherwise, furnished the President with a statement of the facts, as he understood them to be, with a view to his approval. Washington indorsed on it a certificate which was very unsatisfactory to Hamilton, who thereupon addressed to him a long and earnest letter, in which he complained vehemently, and with the frankness and boldness natural to him, of not having been sustained by the President in a delicate and responsible part of his official duties in respect to the public debt. It does not appear that Washington made any reply to this extraordinary letter, or that he did anything further upon the subject which had called it forth.

Whilst the proceedings which led to the debate of which I have spoken were going on, a bill was introduced on the recommendation of the Secretary, for a second a.s.sumption of State debts, and authorizing a loan to be opened for that purpose. Notwithstanding strenuous efforts on the part of the Republican members to prevent its pa.s.sage, the bill pa.s.sed the House, but only by the casting vote of Mr. Speaker Trumbull.

These circ.u.mstances were brought to the notice of the President by Jefferson, before the bill was acted upon by the Senate, and it was rejected by that body. He speaks in his "Ana" of the prevalent impression that the bill had been defeated by the interference of the President, through Lear, with Langdon, who till that time had gone steadily for the funding system but now opposed its extension.

Jefferson says, "Beckley knows this."

But whatever may have been the state of feeling between these great men, arising out of the condition of the finances, or the course of the Secretary in respect to them, we have the best reasons for believing that there was a growing sentiment in the Federal party adverse to the expediency of keeping on foot the funding system. It soon began to lose the brilliant hues in which it had been clothed, at its first introduction, by the very imposing report of the Secretary. Our foreign creditors showed an unwillingness to subject their debts to its operation, and the means taken to find subjects to be embraced by its provisions could not fail to excite odium against the measure. The people were not a little predisposed to listen favorably to the charges that were made against it on the part of the Republicans, by the circ.u.mstances heretofore noticed that it was so close an imitation of the English system, and adopted upon the heel of the Revolution. The growing jealousy of the people, and consequent increase of public clamor against it, caused a wide-spread conviction through the Federal ranks that the entire success of the Republican party could only be prevented by its abandonment,--a conviction greatly strengthened and stimulated to action by the startling fact that, although the President had just been reelected by the unanimous vote of the people, the country was convulsed by partisan rancors, for which there was no other apology than the measures of his administration, and the Confederacy which he came into power to cement was in imminent peril of disruption by their violence.

Neither was this the worst nor the most humiliating view of the case.

For the first time during our existence as an independent nation, even including the period of the proverbially weak government of the Confederation, our free inst.i.tutions suffered the discredit of an open rebellion against the authority of the Federal Government springing up in the Quaker State, one of the oldest and best settled in the Confederacy and in which was established the seat of that Government, against the imposition of a tax always and everywhere odious, an "infernal tax," as Jefferson called it;--an insurrection of so much importance as to induce Washington to call into the field a force numerically larger than was ever concentrated at one place during the War of the Revolution, or ever organized in one body in the course of two wars through which the country has since pa.s.sed, and nearly if not quite double that with which Scott fought his way through a hostile nation of eight millions, and entered the City of Mexico in triumph. No feature in the character of Washington has ever been disclosed which will allow us to believe for a moment that those scenes could have failed to disturb and agitate deeply his lofty and sensitive spirit. We have a fact, now for the first time, as far as I know or believe, revealed in Randall"s "Life of Jefferson," which gives us some clue to the current of Washington"s thoughts at that very critical period of his life. Hamilton, whose resignation was about to take effect, applied to have the time prolonged until after the impending insurrection had been suppressed, on the ground that as it was menaced in consequence of a measure of his Department, it would not be proper for him to leave his post until the crisis had terminated, and he had also asked for leave to attend the troops to the scene of the outbreak. Both of these applications had been readily agreed to by the President. In the midst of these movements, between the first Proclamation offering pardon to the rebels upon their return to duty and the second calling the troops into the field and announcing the intended application of military force, an express was sent to Mr. Jefferson with an invitation to him to resume his former place in Washington"s cabinet. This fact is indisputable, for Jefferson"s answer declining the invitation is published by Randall.

What was the nature and what the extent of Washington"s design in this application? The a.s.sumption is justified by the lapse of time and by other circ.u.mstances, that as no record of his intentions has come to light none exists, and it is therefore a question on which we are only able to speculate; but there is another question, the answer to which, though not quite certain, may be made so, and which, when ascertained, would throw much light upon the subject of our speculations.

Was Hamilton advised of the application to Jefferson, and was it made with his approbation? The thorough examinations and publications which have been made of the papers of both Washington and Hamilton, without the disclosure of a single reference to the main fact, authorize the belief that Hamilton never was a party to the movement in any shape. In respect to Hamilton"s papers, this inference is particularly strong, as, from the quasi-rivalry which has recently been set on foot by his descendants between his own fame and that of Washington, it may well be presumed that if they could have furnished evidence of such an act of disloyalty to Federalism on the part of Washington as his invitation to Jefferson, who had, after his retirement, openly charged Congress with the most flagrant corruption, and traced its origin to the measures of the Secretary of the Treasury, the information would certainly not have been withheld from publication. The same considerations lead with still greater confidence to the conclusion that no movement had been made towards any other than a temporary change of purpose in regard to his resignation on the part of Hamilton. Washington"s letter giving his consent to the postponement, is published among the "Hamilton Papers,"

and from all that was said or done upon the subject it is quite clear that no attempt was made by him to dissuade Hamilton from carrying his resolution into effect, and that such resolution was final on the part of the latter from the beginning.

Incidents occurring at an early period of their relations were well calculated to induce circ.u.mspection in such a matter on both sides. The uncertainty in regard to Washington"s ulterior intentions in the step he had just taken will become more apparent the more the question is considered. Mr. Randall seems to infer from it a desire on his part to return to the system of _a balanced government_ with which he commenced his administration. But to the consummation of such a design the a.s.sent of Hamilton was absolutely indispensable, and that, with the lights before us, we may safely a.s.sume was neither asked nor given. I find it, besides, difficult to resist the conclusion that Washington"s preference for that sort of government must by that time have been greatly weakened if not entirely extinguished. He had tried it under circ.u.mstances far more eligible than those then existing or than he could reasonably antic.i.p.ate, and had found it disastrous. Jefferson had in the most positive terms declined an attempt to coalesce with Hamilton, as made impossible by the radical differences in their political principles. The same differences continued, and their personal relations had now become much more embittered. For these and other reasons that could be given, it is extremely difficult to reconcile with his well-known prudence the design hypothetically attributed to Washington by Randall.

If there is the force in these suggestions that they appear to me to possess, we would seem to be driven to the conclusion that Washington contemplated, in military language, a _change of front_ dependent upon Jefferson"s acceptance; that he meant not only to place Jefferson at the head of his cabinet, but to give an increased effect to his principles in the future administration of the Government. I confess that this is a startling supposition, even to my own mind, and one in respect to which I feel that I cannot go much beyond surmise. A step of so decided and so pregnant a character, taken under the pressure of a situation for many reasons so critical, could not have been thought of by such a man as Washington without ulterior, well-considered designs. What were they, if not of the character I have suggested? I can conceive of no other answer to this question which is not more inconsistent with well-known facts.

Considerations were not wanting to persuade him that his second term, under an administration thus directed, would be more agreeable as well as more auspicious for the country than the first had been. I have before referred to the contrast between Jefferson and Madison on one side, and Hamilton on the other, presented by the fact that whilst the former entered upon the discharge of public offices with feelings and views similar to those with which they accepted private trusts, considered themselves under equal obligations to respect the rights and to carry into full and fair effect the intentions of the parties chiefly concerned, and would have regarded a failure to do either as much a violation of the principles of probity and honor in one case as in the other, the latter neither entertained nor professed to act upon such opinions; he had on the contrary a conviction, which he never changed, that there were deficiencies in the popular mind which made it impracticable on the part of men in power to deal safely with the people by appeals to their good sense and honesty, and that they could only be successfully governed through their fears or their interests. Hence his justification of measures addressed to their pa.s.sions and particular interests, and hence his indifference to the faithful observance of the Const.i.tution as a moral or honorable obligation and his utter recklessness of const.i.tutional restraints in his public career, notwithstanding the perfect uprightness of his dealings in private life.

Washington"s personal character has been never correctly appreciated, if the former of these systems or ideas was not more congenial with his taste and with the suggestions of his heart than the latter. In giving his a.s.sent to the bill for the establishment of the bank, he could not shut his eyes to the fact that he was sanctioning a measure which he had conclusive reason to believe was never intended to be authorized by the Const.i.tution, framed by a convention over which he had presided. Reasons of supposed state necessity we are warranted in believing reconciled his conscience to the step, but it cannot be doubted, without injustice to his character, that it was a hard service and altogether repugnant to his feelings. His inquietude under these restraints upon his natural inclinations was exhibited on more than one occasion. His letter to the venerable Edmund Pendleton, (one of the purest of men,) published by Randall, was one of them. That rumors were rife in respect to the measures decided upon by Federal cabals if Washington had refused to sign the Bank Bill we learn from several sources, and no one who knew Mr. Madison can doubt that he spoke with full knowledge when he said to Trist as already quoted, that if the President had vetoed the Bill "_there would have been an effort to nullify it_" (the veto), "_and they_" (the leading Federalists) "_would have arrayed themselves in a hostile att.i.tude_." It is, besides, against nature to suppose that Washington"s consciousness of the past condition of things in this regard and recollection of the scenes referred to by Madison, had not been painfully revived by the offensive letter he had received from Hamilton only four months before the period of which we are speaking.

The probable correctness of the inference under consideration ought not to be tested by the character of the subsequent relations between Washington and Hamilton. Jefferson declined the President"s invitation to resume his former seat in his cabinet promptly but respectfully and kindly. Mr. Randall says that he has read a declaration by President Washington to the effect that he would have offered the place to Madison, upon Jefferson"s declension, if he had not ascertained that he would not accept it. These successive and marked steps by the most prominent leaders of the Republican party, taken in connection with the results of the preceding Congressional elections, and the avowed principles upon which they had been conducted, show clearly that the lines had been distinctly and finally drawn between the Republicans who had hitherto sustained the administration in general and the Federal party; the opinion at which Jefferson and the Republicans had arrived being that the differences which had arisen, founded as they chiefly were on the interpretation of the Const.i.tution and the degree of sanct.i.ty attaching to that instrument, could not be satisfactorily settled by any divided counsels, or by any the most liberal and friendly dispositions of the President; that the season for obtaining present redress and future security upon those points through such means had pa.s.sed away, and that their proper course, whilst continuing their respect for and their confidence in Washington to the end, was to support the measures of his administration as far as they could consistently with their avowed principles, and to place the Government in the hands of men of their own school at the earliest practicable moment after his voluntary retirement.

The President, having greatly against his inclination consented to stand by the helm for another term, and having been reelected by the unanimous vote of the country, had no other course to pursue than to carry on the Government under its existing organization, relying for his support upon the Federal party, with such cooperation as his measures might draw from its opponents. Hamilton resigned at the end of the quarter, his resignation was accepted in the way I have described, and as the actual and acknowledged leader of the Federal party, though out of office, he kept up his relations with Washington"s administration as well as with that of his successor, Mr. Adams, as has been already set forth. The administration having been virtually, and, in the English sense, actually overthrown by being reduced to a minority in the popular branch of the national legislature, the President, having signally failed in his disinterested and patriotic attempt to arrest the adverse current by a reconstruction of his cabinet so as to place at its head the known and acknowledged leader of the opposition to the princ.i.p.al measures of the Government, and obliged by his reelection to remain at his post till the expiration of his second term or to retire with discredit, turned his attention to an earnest survey of the policy to which so disastrous a state of things might be attributed. That it had not originated in any objections personal to himself was shown by the fact that the same election which exhibited the evidence of dissatisfaction, on the part of a majority of the people, with the measures of Government, demonstrated also by his unanimous reelection their continued confidence in him.

Those measures to which the deprecated result was attributed were the bank and the funding system. Jay"s treaty had no agency in producing it, that disturbing question not having then arisen, and its only effect, in this respect, was during the last year of Washington"s administration to increase the majority against the Government to so great an extent as to enable the Republicans to carry Kitchel"s resolution condemnatory of the President"s own act in refusing to lay before Congress the instructions and papers connected with the negotiation of the treaty, by a vote, including absentees whose sentiments were known, of very nearly two to one.

The bank, to the operations of which Jefferson, whilst in retirement, openly and unreservedly attributed the corruption of Congress, had pa.s.sed beyond reach, but the funding system was yet open to the action of the Government. It was in respect to this ill-omened and ill-fated measure that the tocsin had been first sounded of that alarm which now extensively pervaded the public mind, and it was beyond all doubt that no other act of the Government had proven a more prolific source of popular discontent. It was not the existence of the debt of which the people complained; they gladly accepted that burden, on the contrary, as the price of their liberties; but it was the system devised by Hamilton for its management and for the treatment of their fiscal affairs generally that excited their severe displeasure. They believed that the politico-fiscal agencies congenial with, and cherished features of, monarchical inst.i.tutions had been adopted in servile emulation of the English system, and as they were acknowledged sources of corruption in that system, that they had been introduced for similar effect here.

Hamilton"s oft-avowed preference for the English model gave much color to the first part of this conclusion, and the exasperated feelings of our people toward that government predisposed the public mind against the whole policy. Nor were these resentments without adequate cause. No independent nation was ever worse treated by another than was ours by Great Britain from the recognition of our Independence until after the war of 1812. So arrogant and outrageous was her conduct at this very period that Washington, as appears by his published letters to Hamilton in August 1796, found it difficult to keep the expressions of his dissatisfaction within the bounds demanded by his official position, and Hamilton was driven to admit in his reply that "we were subject to inconveniences too nearly approaching a state of war" to be submitted to. But these were not the only nor even the princ.i.p.al objections of the people against the funding system. They were satisfied by reason and observation that there could never be a proper economy in public expenditures, or a check to the increase of public debt so long as Government was not only under no obligation to pay the princ.i.p.al of such debts but had no right so to do or the right only in respect to a mere pittance, as was the case with our funded debt. The power to convert the credit of the nation into revenue by such a policy, of which Hamilton boasted, was a power in which they thought no government could be safely indulged. If the argument in favor of that opinion, which need not be repeated here, was not sufficient to establish its soundness, the experience of the mother country, which was constantly before their eyes, afforded conclusive demonstration of it. I have elsewhere stated the extent to which the debt of England had then already increased, and the force with which her ablest writer on political economy and finance had traced that alarming growth, by the lights of experience and reason, to those features in her funding system.

Hamilton had been throughout and still remained devoted to what we may call English principles in the management of our finances, and constantly desirous to extend them to every species of our public debt, foreign and domestic. General Washington was wedded to no such views.

The subject belonging peculiarly to Hamilton"s department, and having full confidence in him, he acquiesced in the course he recommended, but he was always open to conviction, and only wished to leave the question of its continuance to be decided by its results. In the course of a conversation with Mr. Jefferson, designed to prevail on him to remain in the cabinet, the latter says that Washington touched upon the merits of the funding system, to which he knew that Mr. Jefferson was earnestly opposed, and expressed himself thus: "There is a difference of opinion about it, some thinking it very bad, and others very good; experience was the only criterion of right which he knew, and this alone would decide which opinion was right." The disappointment generally experienced by the original friends of the system cannot have failed to reach Washington, and it is impossible that the discredit which the measure had brought upon his administration could have escaped the notice of so sagacious and generally dispa.s.sionate an observer of the course of events. Hamilton was to leave him in a month or two, and he was destined to pa.s.s through an ordeal becoming every day more and more severe. To relieve his Government as far as practicable from odium from any source, was therefore a suggestion of duty and interest to which he could not but give heed. The measure of which we are speaking challenged his attention. The power of the Government over it, without the consent of its creditors, was, it is true, very limited, but it could relieve the system to some extent of a portion of its unpopularity by lessening its character of irredeemability. The annual eight per cent. for interest and princ.i.p.al (only two per cent. towards the princ.i.p.al, which was all the Government had a right to pay, but was never obliged to pay), it could make itself liable to redeem punctually, and could give to the creditors securities which would put it out of its power to evade its undertaking.

This was all that could be done, and it was not to be doubted that the accomplishment of this through the interference of Washington, with a return to the old mode of raising money, would go far to allay honest apprehensions, and to remove prejudices against his administration without disadvantage to the public service certainly, and, I may add, without the slightest departure from the course which it became him to pursue. He determined to pursue it. That the resolution in regard to the policy finally adopted upon this point originated with Washington alone, without consultation with, or advice from, Hamilton, is rendered certain to my mind from contemporaneous circ.u.mstances, some of which will be referred to. He, of course, communicated his intention to Hamilton, who proposed to take charge of all the preliminary steps that could be adopted during the short period of his remaining in office to prepare the way for the contemplated change. This was proper in itself and a.s.sented to by the President, who thus, as was his way on most occasions, enabled Hamilton to give to the whole affair the shape he thought best. The funding system was emphatically his measure, and if it was to be discontinued, it was proper that he should be permitted to make its exit as graceful as was practicable.

The intended movement was preceded by the President"s speech to Congress in November, 1794, from which I extract this pa.s.sage: "The time which has elapsed since the commencement of our fiscal measures has developed our pecuniary resources so as to open a way for a definitive plan for the redemption of the public debt. It is believed that the result is such as to encourage Congress to consummate this work without delay.

Nothing can more promote the permanent welfare of the nation, and nothing would be more grateful to our const.i.tuents. Indeed, whatsoever is unfinished of our system of public credit cannot be benefited by procrastination; and, as far as may be practicable, we ought to place that credit on grounds which cannot be disturbed, and to prevent that progressive acc.u.mulation of debt which must ultimately endanger all governments."

This was substantially the only part of the speech which related to any other matter than the Pennsylvanian insurrection, and no one familiar with Hamilton"s writings can doubt that the entire paragraph was prepared by him,--a proceeding common and in this instance particularly proper. It presented in general terms a gratifying a.s.surance of the improvement in the revenues of the Government, and the promised advantages to the national finances. No reference is made to the character of the measures by which those advantages were to be secured; these might be provisions for the immediate reduction of the debt, or at the least for an earlier reduction than that which was authorized by law.

On the 25th of January, eleven days before he left the department, Hamilton tendered to the Senate an elaborate "plan for the further support of public credit on the basis of the actual revenue." It was not his annual report, nor had it been called for by the Senate, but had been prepared, he said, as a part of his duties, according to the Act by which they were prescribed, and in conformity with the suggestions of the President. It fills twenty-seven pages, small print, in the large folio edition of the American State Papers, and, being his last, was of course prepared with great care and, as much of course, with great ability. Jefferson thought, at times, that Hamilton did not himself understand his own complicated and elaborate reports on the finances, but in this I am persuaded he was entirely mistaken. Hamilton evidently held the thousand threads which traversed these voluminous works with a firm and instructed hand, and perfectly understood their several and manifold connections with the body of the doc.u.ments and the results to which the whole and every part tended. That he meant that others should understand them as well as he did is perhaps not so certain.

His plan did not even look to a present reduction of the debt, which would seem to be the natural consequence of a revenue so prosperous as that he had described in the speech; that would have been an impossibility. At the date of his report the debt had increased four millions from what it was when the funding system was established, independent of the a.s.sumption of those of the States, and at the end of Mr. Adams"s administration, the increase stood at eight millions. I have not examined the result for each year, but am confident that I hazard little in affirming that there was not a single year, from the first period to the last, during which the public debt was not increased. Mr.

Jefferson, in a letter to Mr. Madison, written in 1796, expressed the opinion that, from the commencement of the new government till the time when he ceased to attend to it, the debt had augmented a million a year.

The preceding statement shows the correctness of his calculation.

Neither did Hamilton propose any measures by which the payment of the debt might be accelerated, but the reverse. The whole debt then stood as follows: foreign debt, between thirteen and fourteen millions; domestic debt funded, including those of the States, between sixty and sixty-one millions, and domestic debt unsubscribed, between one and two millions.

The foreign debt was payable by installments, ending at the expiration of fifteen years. His plan was to offer the foreign creditors one half of one per cent. interest, annually, more than it then drew, if they would consent to make it a domestic debt, and postpone the redemption of the princ.i.p.al till 1818, which would defer it between eight and nine years; or, if they refused that, it might remain redeemable at any time they proposed, so that the redemption of the princ.i.p.al was not accelerated by making it less than the fifteen years. A law authorizing such a change was pa.s.sed, the offer made and declined. The debt was suffered to stand as it did, and the last payment was made during the administration of Mr. Madison. In respect to the funded debt, all that the report proposed (and that proposition was carried into effect by law shortly after Hamilton retired) was to add materially to the existing provisions for the payment of the public debt, and to provide effectually that the funds set apart for that should be regularly and inviolably applied, first, to the payment of as much of the funded debt as the Government had a right to pay annually, which was two per cent.

of the princ.i.p.al besides the interest, and after that to the then existing public debt generally; that is to say, in regard to the funded debt, it changed the option of the Government to pay the two per cent.

into a positive obligation, and provided adequate funds for that purpose. It was calculated that these provisions would redeem the funded debt bearing an immediate interest in 1818, and the deferred funded debt in 1824; they did so, and thus the funded debt was extinguished. All succeeding loans, as well under the administrations of Washington and Adams as subsequently, were made redeemable at or after a certain period, save in rare and very limited instances controlled by special circ.u.mstances and not const.i.tuting modifications of the general rule of the Government.

By this step Congress carried into effect an object for which the Republicans had striven since soon after the establishment of the funding system, and upon the resolution to accomplish which Hamilton had interposed a temporary obstruction by his report in December, 1792.

The funded debt was changed into a simple debt payable by regular though small installments, at stated and certain periods. Its ultimate redemption was made certain, and the further practice of funding successfully discountenanced. That was done which Washington desired to have done; not indeed in the plain, straightforward way in which he would have done it, for that would have shown that the Government, in deference to public sentiment, had, to borrow a common phrase, taken the back track; an exhibition which Hamilton"s course was designed to avoid.

What the latter undertook to do he did effectually and in good faith, but a careful perusal of his last _expose_ will show how little the whole proceeding was in harmony with his individual feelings.

The following are extracts from that extraordinary paper:--

"To extinguish a debt which exists and to avoid the contracting more are always ideas favored by public feeling; but to pay taxes for the one or the other purpose, which are the only means of preventing the evil, is always more or less unpopular. These contradictions are in human nature; and happy indeed would be the country that should ever _want men to turn them to the account of their own popularity or to some other sinister account_.

"Hence it is no uncommon spectacle to see the same men clamoring for occasions of expense when they happen to be in unison with the present humor of the community, whether well or ill directed, declaiming against a public debt and for the reduction of it as an abstract thesis, yet vehement against every plan of taxation which is proposed to discharge old debts or to avoid new by the defraying of exigencies as they emerge.

These unhandsome acts throw artificial embarra.s.sments in the way of the administration of a government."

These observations afford evidence of the wounded spirit under which he was acting, and also of the strong sense he entertained of the influence which a necessity for taxation is calculated to exert upon the minds of a legislature anxious for the redemption of a public debt. Do they not further explain the motive for the array of taxes that would be required to carry into effect the Resolution of 1792, in favor of making provision for the redemption of the funded debt, contained in his report upon that resolution?

When speaking of now resorting to the old practice of antic.i.p.ating revenues, that is, by making provision for the payment of both princ.i.p.al and interest, in the departure from which practice the English Funding System had its birth, he says:--

"This would be at the same time an antidote against what may be p.r.o.nounced the most plausible objections to the system of _funding_ public debts; which are, that, by facilitating the means of supporting expense they encourage to enterprises which produce it, and by furnishing in credit a subst.i.tute for revenue, likely to be too freely used to avoid the odium of laying new taxes, they occasion a tendency to run in debt. Though these objections to funding systems--which, giving the greatest possible energy to public credit, are a great source of national security, strength, and prosperity--are very similar to those which speculative men urge against national and individual opulence, drawn from its abuses; and though perhaps, upon a careful a.n.a.lysis of facts, they would be found to have much less support in them than is imagined, attributing to those systems effects which are to be ascribed, more truly, to the pa.s.sions of men and perhaps to the genius of particular governments; yet, as they are not wholly unfounded, it is desirable to guard, as far as possible, against the dangers which they suppose, without renouncing the advantages which these systems undoubtedly afford."

When we find him thus dallying with a pet system on the eve of its abandonment, thus filling a paper designed to prepare the way for that result with his reasons for deprecating it, who can suppose that its impending fate was of his own suggestion, or doubt that he looked to its restoration under more favorable auspices?

The Secretary very naturally endeavors in this paper to place the provisions now recommended in respect to the Sinking Fund upon the same footing with those contained in his first Report upon public credit, conformably to which his funding system was established. Without the slightest desire to a.s.sail or to weaken any of his attempts to rest his acts on the most favorable ground consistent with truth, it is yet due to the memories of the patriotic men who by their fearless and persevering efforts succeeded in discrediting that dangerous system, and finally in causing it to be discontinued from the operations of our Government, that the circ.u.mstances under which they acted should not be misrepresented. The difference between the provisions of the Sinking Fund first and now adopted was great indeed. The grant of the funds to the first, to say nothing of their insufficiency, lacked the essential quality of being irrevocable, but was left subject to the action of Congress. There was therefore no reason to think that more might be expected from the Sinking Fund here than had been realized in England, where it had not only been found entirely ineffectual even in time of peace, but the funds vested in the Commissioners had on more than one occasion been used as a basis for new loans. But now, when the business of redemption was entered upon in earnest, that matter was placed upon a very different footing. The funds were not only more ample, but they were vested in the Commissioners as an irrevocable trust, and the faith of the Government was pledged that its execution should not be interfered with. As widely different were the dispositions of the Government and the sentiments of its princ.i.p.al supporters. On the former occasion the proposals submitted to Congress by the head of the Treasury Department, and most trusted officer of the Government, were to fund the entire debt of the United States upon the following terms, viz: 1st.

That the whole princ.i.p.al should be forever irredeemable at the option of the United States; 2d. That they should not even reserve to themselves a right to pay more than two dollars upon a hundred of the princ.i.p.al, however full their coffers, and however great their convenience to pay; and, that no obstacle might be wanting to the redemption of that pittance, he proposed further to a.s.sume and fund in the same way twenty-five millions of the debts of the States which the Federal Government was under no obligations to pay and was not asked to a.s.sume.

This policy was entered upon in the face of the fact that the debt of England, under a similar system, had, in eighty years, increased from some five millions to two hundred and seventy-six millions of pounds sterling, and was still increasing.

After these propositions had been substantially adopted by Congress and sustained by the Government, Hamilton, having the entire direction of its affairs, and knowing the spirit and firmness with which those who disapproved of his schemes always maintained their views of the public interest, had no right to complain of, and ought not to have been surprised at, the opposition he encountered from them, under the weight of which his Funding System, in respect to the future action of the Government in the management of its finances, soon became a dead letter, no further thought of than to get rid of the debts that had been contracted under it, with the intent to return to the old mode of antic.i.p.ating revenue, that of direct loans payable at or after specific periods, princ.i.p.al as well as interest; the only way by which, as Adam Smith had demonstrated, a nation could avoid a permanent and ruinous public debt,--a view of the subject which came too late for England, but was, happily, in season for us. Though the Government had, by the Act of March 3d, 1795, pa.s.sed to carry into effect the improved views of Washington, placed the management of our finances upon a better footing, no progress was made in the reduction of the public debt; but the act doubtless accomplished much in restraining its increase. It was not an easy thing to keep down the public debt under an administration which, like that of Mr. Adams, in pursuance of the express advice of Hamilton to Wolcott, paid upon its loans an annual interest of eight per cent., the highest that had then ever been paid except by England to her bank upon the loan obtained from it on its first establishment.

Upon Jefferson"s accession to power he denounced a public debt, in his message to Congress, as a "moral canker," and invoked the aid of the legislature for its extinction at the earliest practicable period. The Committee of Ways and Means, with John Randolph at its head (his brightest period of public usefulness), entered upon the subject "_con amore_." They called upon the Secretary of the Treasury for a thorough exposition of the state of the public debt, and for his opinion in regard to the best mode of dealing with it. Mr. Gallatin"s reply, which may be found in the publication of American State Papers,--t.i.tle "FINANCE," Vol. I.,--gave a full statement of the then condition of the debt, and pointed out the defects through which the Act of March 3, 1795, had been rendered inadequate to the accomplishment of all the objects for which it was designed. I will refer to but one of them, which consisted in its limiting the appropriation for the redemption of the public debt, beyond that which had been funded, to "surpluses which shall remain at the end of every calendar year, and which, during the session of Congress next thereafter, shall not be otherwise specially appropriated or reserved by law." Our experience of the action of Congress has been too full to make it necessary to speak of the extreme improbability of any considerable surpluses being left by that body acting under no more specific restraint than that which is here provided, and upon examination of the books of the treasury it was found that so far from there having been any such surpluses from the establishment of the present Government in 1789 till the close of the year 1799, the appropriations charged upon the revenue by Congress had exceeded, by nearly a million of dollars, the whole amount of such revenue, whether collected or outstanding.

To remedy results so unfavorable to the accomplishment of the object in view, the Secretary advised specific appropriations of such sums as, upon a fair estimate of the wants and resources of the country, ought in the opinion of Congress to be applied to the payment of the public debt, and to make such appropriations irrevocable and their application mandatory on the Commissioners of the Sinking Fund. The committee adopted the suggestion with alacrity as one which, in addition to securing the early performance of a sacred duty, could not in their opinion fail to induce economy on the part of Congress in its disposition of the public funds. They therefore reported a bill, which became a law, appropriating annually to the Sinking Fund seven millions three hundred thousand dollars for the payment of the public debt. This sum was increased to eight millions in consequence of the purchase of Louisiana. During the administration of Mr. Madison the annual appropriation was increased to ten millions, besides an additional appropriation of nine millions, and one of four millions if the Secretary of the Treasury should deem it expedient; and all of these appropriations were made irrevocable and compulsory as respected the action of the Commissioners of the Sinking Fund.

The consequences of this change in the action of the Government upon the subject of the public debt and of this liberality of appropriations under Democratic administrations, were the discharge of thirty-three millions of the princ.i.p.al of the debt, besides the payment of interest on the whole, during the Presidency of Mr. Jefferson, and its final extinguishment under President Jackson, notwithstanding the intervention of a war with England commenced at a period of the greatest financial embarra.s.sment.

I have been induced to take so extended a notice of this matter as well by the circ.u.mstance, to which I have before referred, that it presented a leading subject of party divisions in this country, as because of the influence which it and its adjuncts the Bank of the United States and the Protective System have exerted upon our politics. It has been seen that the Funding System, however, preceded the bank in its establishment, and it became also an "obsolete idea" many years before the latter was declared to be such by its most devoted advocate and reckless supporter, Daniel Webster. That the bank did not share that fate at a much earlier period was because Henry Clay and John C.

Calhoun, both disciples of the old Republican school,--the former one of the ablest among the opponents of the revival of the bank in 1811,--tempted by the political allurements of the day in 1815, advocated the establishment of a new bank, and because that pure man and patriot, James Madison, under mistaken impressions in respect to the absolute necessity of such an inst.i.tution, gave his a.s.sent to its incorporation.

No public question was ever longer or more severely agitated in any country than that of the existence of a national bank has been in this.

Madison acquired enduring honor by his unanswerable speech against its const.i.tutionality. It divided the cabinet of President Washington, and contributed with other causes to give birth to a political party which kept his administration at bay, overthrew that of his successor, has sustained itself in power ever since (with brief and easily explained interruptions), and is now, after the lapse of nearly seventy years, in full possession of the Federal Government. It gave position in 1811 to Henry Clay as one of the strong minds of the country, derived from his speech against rechartering the bank, by far the best speech he ever made and nearly equal to that of Madison in 1790, and it enabled that venerable revolutionary patriot, George Clinton, to add new laurels to his already great fame by his casting vote against the pa.s.sage of the bill for its re-incorporation. Whilst in 1815 it marred forever the political fortunes of Clay and Calhoun, then standing at the head of the rising Republican statesmen of the country, in 1830 it made memorable and glorious the civil career of Andrew Jackson through his celebrated veto--a n.o.ble step in that fearful issue between the respective powers of the Government and the Bank, on the trial of which that inst.i.tution justified and confirmed Jefferson"s gloomy forebodings at its first establishment by spreading recklessly and wantonly (as is now well understood) panic in the public mind and convulsions in the business affairs of the people, through which incalculable injury was inflicted upon the country, and by wasting its entire capital of thirty millions in wild speculation and in corrupt squandering upon parasites and political backers. It did not however prove too strong for the Government, as Mr. Jefferson apprehended, but was itself overwhelmed in utter defeat and disgrace. So thorough has been its annihilation that its books and papers were a few months since sold by auction, in Philadelphia, by the ton, as waste paper!

Who can call to mind without amazement the extent to which the impression was fastened on the public judgment that a national bank was of vital necessity to the healthful action of the Federal Government, indispensable to the collection of its revenues, to the management of its finances, to the transfer of its funds from point to point, and, above all, to the execution and support of domestic exchanges, without which the most important business of the country would be unavoidably suspended, and now see that all this was sheer delusion; or who can reflect upon the bold and profligate action taken by the bank to force a compliance with its application, without acknowledging and admiring the wisdom of the Federal Convention in refusing, as it did almost in terms, to confer upon Congress the power to establish such an inst.i.tution, so inefficient for good and so potent for mischief, or without applauding the true conservatism and patriotic spirit of the Democratic party during a forty years" struggle to expel from our system so dangerous an abuse, or without rejoicing that that great object was finally achieved and blessing the memory of the brave old man to whom the achievement is mainly to be credited.

The Protective System was another of the important measures brought forward at the commencement of the Government, and had its origin in the prolific mind of Hamilton. Efforts have been made to trace its commencement to the legislation of the first Congress, but they have not been successful. The idea of protection, beyond that which is incidental to a tariff for revenue and could be effected without losing sight of the revenue point, was not, at that time, broached in Congress or inferable from the character of the duties imposed. It was in Hamilton"s masterpiece--his elaborate report, nominally upon manufactures, but embracing in its range every pursuit of human industry susceptible of encouragement under an unlimited government--that the subject was first brought to the notice and recommended to the favorable consideration of Congress.

I have already described, more fully, perhaps, than might on first impression be thought necessary, the length and breadth of that famous doc.u.ment, the boldness and extravagance of its ultra-lat.i.tudinarian pretensions to power in the Federal Government, including unlimited authority to raise money by taxes and an equally unlimited power to spend it in any way which Congress might think would be conducive to the general welfare. The vehement denunciation of its character by Mr.

Jefferson and his friends, with continually increasing indications of popular discontent, prevented Hamilton from attempting any measures worthy of notice to carry into effect his recommendations--and no a.s.sumptions, beyond the revenue standard, were acted upon by the administrations of either Washington or Adams.

The enforcement of Hamilton"s recommendations was reserved for the close of the War of 1812, a period of which I have already spoken as one which brought on the political stage a new cla.s.s of Presidential aspirants, members of a succeeding generation and unknown to revolutionary fame.

Among the most prominent of these stood Crawford, Clay, Calhoun, Adams, Webster, and Lowndes,--the latter, perhaps, the most likely to have succeeded, if his useful life had not been brought to a premature close.

In the same year, 1815, was revived the idea of a national bank, and no fitter a.s.sociate could have been devised for it than the Protective System. They had a common origin, even in their political aspects, were designed for a common effect, and were moreover alike adapted to the immediate policy of two of the Presidential aspirants of the Republican stamp, Clay and Calhoun,--that of conciliating the good-will of those who still clung to the wreck of the Federal party, which having been shattered and disabled by its course in the war, was at the moment drifting upon the political seas. Henry Clay, with better qualifications for success than his not less ambitious rival, seized the prize in view, and after long compet.i.tion from the latter, and against perpetual, though sometimes concealed opposition from Webster, attached the ma.s.s of the Federal party to his fortunes, and held them there to the close of his remarkable life. Shouldering a large share of responsibility for the reintroduction of a national bank, he added to his programme the Protective System, stopping in the first instance at a protective tariff, but willing, as was clearly seen, to embrace Hamilton"s entire scheme, and superadding to these a system of internal improvements by the Federal Government, in respect to which he went, on the point of const.i.tutional power, beyond his great prototype. These were the elements out of which he constructed his famous "American System." A convert to theories and measures hostile to the earliest and most cherished principles of the old Republican party, he of course soon lost his position in its ranks, and was in due season installed as the leader of that with which all its wars have been waged. Possessing certain qualities eminently adapted to attract the popular admiration, and which could not have failed to elevate him to the Presidency if he had remained in the Democratic party and had adhered to its principles, he infused into the torpid body of the Federal party elements of strength, of which it had always stood in need; besides bringing to it a leader of fascinating manners and brilliant talents, he gave a new and more captivating form to the platform of principles and policy in support of which its original members and their descendants had been trained, excepting only the Funding System, which had not only been tabooed by the good sense of our people, but as to which England was yet uttering warnings to other nations of too fearful import to allow its revival here to be for a moment contemplated even by a politician so bold and too often reckless as Clay. Thus reinvigorated and backed by the money-power of the country, during a quarter of a century, and with never quailing spirit, he conducted that party, under various names but striving always under the banner of the same "American System," through a succession of political campaigns which left their injurious traces upon the country.