Financial History Issue 119 (Fall 2016) - Page 21

a loan that year from France, which, as Hamilton foresaw, wanted to destabilize Britain. Morris used the loan to purchase most of the bank’s shares for the US government, a necessity because private investors, given the shakiness of America’s finances, largely refrained from buying the shares that Morris offered. The bank opened in Philadelphia in 1782 and offered considerable aid to the government during the two-year transition from war to peace. Morris then sold the government’s shares to private investors, and the Bank of North America continued as an ordinary commercial bank.8  Courtesy Wikimedia Foundation Reprinted with permission from Alexander Hamilton: The Illustrated Biography, text © 2016 by Richard Sylla, Sterling Publishing Co., Inc. Dr. Richard Sylla is the chairman of the Museum of American Finance and was formerly the Henry Kaufman Professor of the History of Financial Institutions and Markets at the NYU Stern School of Business. He is one of the nation’s leading Hamilton scholars. $3 Continental Currency note, 1776. for example, which seemed so obvious to Hamilton and to a businessman such as Morris that it “needs no discussion”— although in America, as elsewhere, few corporations existed then. The National Debt The letter ends with a brief look at the national debt once the war ended. It wouldn’t pose a problem, Hamilton said, because good financial administration and the country’s growth would enable America to pay the debt in a matter of decades. In fact, the debt had benefits: A national debt if it is not excessive will be to us a national blessing; it will be a powerful cement of our union. It will also create a necessity for keeping up taxation to a degree which without being oppressive, will be a spur to industry.…We labor less now than any civilized nation of Europe, and a habit of labor in the people is as essential to the health and vigor of their minds and bodies as it is conducive to the welfare of the State. We ought not to suffer our self-love to deceive us in a comparison upon these points.7 Here we catch a glimpse of one reason that Hamilton later became the least loved of the founders. He spoke his mind frankly, in this case saying that he didn’t think Americans worked very hard. If they had to pay taxes to service the national debt incurred as the price of their liberty, they would have an incentive to work harder. To Hamilton, that was good for them and the country regardless of whether they liked it. The letter to Morris was a private communication, but it shows the same candor that marks Hamilton’s public speeches and writings. His often polemical public work, whether over his own name or various pseudonyms, provoked strong reactions — both favorable and unfavorable. The other founders paid greater heed to what they said and wrote as it affected their public images. This tendency haunted Hamilton in later years. Morris replied to Hamilton that he had been thinking along similar lines, although the Bank of North America that he proposed had a less ambitious scale and scope than the national bank that Hamilton recommended. Much of the capital for the Bank of North America — which Congress chartered in 1781 — came from Notes 1. Alexander Hamilton, “The Continentalist No. III,” Papers of Alexander Hamilton, vol. II, p. 661. 2. We know neither the exact date nor the addressee — likely a member of Congress — of this letter. Only the draft of the letter exists in the Hamilton Papers at the Library of Congress. 3. Papers of Alexander Hamilton, vol. II, p. 245–45. 4. Papers of Alexander Hamilton, vol. II, p. 248. 5. Papers of Alexander Hamilton, vol. II, p. 606. 6. Papers of Alexander Hamilton, vol. II, p. 618. 7. Papers of Alexander Hamilton, vol. II, p. 635. 8. After a number of mergers over the years, America’s first bank now forms part of Wells Fargo. www.MoAF.org  |  Fall 2016  |  FINANCIAL HISTORY  19