Alexander Hamilton

A December 14, 1790 report details the proposal for the Bank of the United States. Jefferson, Madison, and Adams would be Hamilton’s most venomous critics, but they were “backward in finance” (414). Jefferson and Adams hated banks. Adams wanted a central bank with state branches, but not a single private branch. Hamilton set out to demonstrate advantages of banks. He proposed that “monetary policy was so liable to abuse that it needed some insulation from interfering politicians” (418). Eight million would be paid in government securities (75% of the total).

On January 20, 1971, a charter passed that approved the bank for 20 years. Madison argued that the Constitution did not allow a central bank. Nearly all southern delegates opposed the bank as well.

On July 4, 1791, “the subscription to the stock of Hamilton’s central bank was open to an expectant public, and the public promptly went berserk” (425). The rampant speculation led to the first bank crash on August 11, 1791. Jefferson was disgusted by the speculation and believed that Hamilton “was becoming a menace to the American experiment, one who had to be stopped at all costs” (430). 

Hamilton began an affair with 23-year-old Maria Reynolds, a married woman. Eliza and the children had left Philadelphia on July 4 to escape the heat for the rest of the summer. In Hamilton’s account, Maria had approached him at his house, saying that her husband had left her for another woman and she had nowhere to live. After furnishing her with an apartment, they began their physical affair.

Maria was unstable. After reconciling with her husband, James Reynolds, she told Hamilton that James had speculated in insider trading with treasury secrets, and they implied that they would blackmail Hamilton if he did not get James a government job. Hamilton did not. On December 15, 1791, Maria wrote to Hamilton that if he did not reply to her, she would tell Eliza about their affair. Hamilton met with James and paid him 1,000 dollars in blackmail money, then tried to end the affair with Maria.

As Hamilton continued studying American commerce, he believed that the country must learn to manufacture as many of its own products as possible. Britain guarded their textile machinery secrets, but there were English citizens who were willing to defect to America and sell their knowledge. Samuel Slater left Britain with the plans for building a spinning wheel, which he then sold in America. This resulted in a sustained, “daring assault on British industrial secrets” (442).

Hamilton helped to establish the Society for Establishing Useful Manufactures (SEUM). They came up with the idea for an entire manufacturing town. They bought 700 acres in Paterson, New Jersey, and set up cotton mills.

On December 5, 1791, Hamilton delivered his Report on Manufactures. His report did not mention slavery, but condoned child labor. He listed the products he wanted the government to promote, including silk, glass, copper, and wool. The report had little effect. On January 1792, Hamilton received an announcement that three new banks would open. By the end of January, security valuations were at exorbitant, absurd highs.       

On March 9, Duer, one of Hamilton’s assistants, stopped paying some of his creditors and eventually went to debtor’s prison. Hamilton’s critics used Duer’s example to indict Hamilton’s bad judgment about the banking system. Duer had been heavily invested in SEUM, and now the society did not know how it would pay for its New Jersey land. Despite Hamilton’s efforts, the society would go under by 1796 and its buildings remained abandoned. Duer died in prison seven years later. 

Madison and Jefferson began organizing opposition to Hamilton, who they believed was running the country. Hamilton and Jefferson were about to begin a feud of “almost pathological intensity” (464).

Division among politicians soon split into two political parties. Hamilton supporters were the Federalists, and Jefferson’s were Republicans: “The Federalists saw themselves as saving America from anarchy, while Republicans believed they were rescuing America from counterrevolution” (465).

There were frequent debates over whether America should favor Britain or France in partnerships. Britain had more commercial power, but France had helped America win its independence.

During most debates, Washington usually sided with Hamilton, making it difficult for Jefferson to attack him. Jefferson resorted to hiring other people to help him propagate his views, like the poet Philip Freneau. Jefferson lured Freneau to Philadelphia to begin an opposition newspaper, the National Gazette, a Republican outlet that made no pretense of neutrality. However, Jefferson officially brought him to Philadelphia to act as the department’s translator, so that there was no appearance of impropriety, or of actively fomenting resistance against the government.

On February 28, 1972, Jefferson met with Washington and tried subtly to turn him against Hamilton. Hamilton was unaware of the meeting, and Washington was unconvinced by Jefferson’s fears. Madison also escalated his campaign against Hamilton. Hamilton was more hurt by what he viewed as Madison’s betrayal than by Jefferson’s. Washington’s cabinet was growing more bitterly divided each day.

Hamilton resumed writing anonymous articles in the Gazette, and accused Freneau of profiting from the paper, not from his translation job, and highlighted that Freneau’s salary was paid for with treasury money.

Washington sent Hamilton a letter outlining 21 grievances he had heard about Hamilton’s administration. Hamilton responded with a 14,000-word letter defending his decisions. Washington responded with a plea for tolerance, but Hamilton and Jefferson ignored him. Hamilton grew compulsively unable to resist responding to attacks.

Washington lost patience with Jefferson; he did not believe that Hamilton was fostering a monarchic plot against the government, and made it clear that he no longer wanted to hear about it. Jefferson realized that Hamilton had won. 

At 37 years old, Hamilton had more enemies than ever before.

A man named Jacob Clingman—a friend of James Reynolds—discovered Hamilton leaving the home of Maria Reynolds. Clingman was a critic of Hamilton, and when Maria bragged about the control that she and her husband had over Hamilton, Clingman believed it to be proof of Hamilton’s shady financial proclivities. James begins extorting more money from Hamilton. Hamilton eventually cut them off and hoped that they would leave him alone.

In mid-November, Clingman and James Reynolds were charged with “defrauding the U.S. government of four hundred dollars” (493). They went to a Philadelphia jail. Clingman was bailed out by Congressman Frederick Muhlenberg.

On December 12, Muhlenberg met with James Monroe and Representative Abraham B. Venable, both from Virginia. He showed them unsigned notes from Hamilton to James Reynolds. Maria went to Thomas Mifflin, Pennsylvania’s governor, and told him about her affair with Hamilton. Monroe and Muhlenberg then visited her, and received the same story. After his release from jail, James Reynolds disappeared.

On December 15, Monroe, Muhlenberg, and Venable confront Hamilton in his office. Hamilton admitted that the letters are real and explained that he had been guilty of nothing more than having an affair. He had been blackmailed into giving James Reynolds money, but had not compromised or exploited the power of his office.

A clerk named John Beckley made copies of the documents that the three men showed to Hamilton. These would later be leaked to Jefferson, who interpreted them as proof of Hamilton’s unscrupulous use of the treasury for political and financial gain. James Monroe kept the original documents.

In May, 1793, Maria divorced James. Aaron Burr was her lawyer. She married Clingman the day her divorce was finalized. 

Hamilton and Jefferson urged Washington to run for a second term, then turned their attention to the vice presidential race. Hamilton supported John Adams. He was unnerved when he leaned that Aaron Burr might run against Adams. Burr was a Clinton supporter and could cause problems to Hamilton’s initiatives if he won the office. He felt that opposing Burr was a “religious duty” (503), but Burr did not run for the office.

On December 5, 1972, Washington was granted another term in office and Adams was again his vice president.

Jefferson and Madison employed a man named William Branch Giles to help them bring down Hamilton. Giles was a Virginia Congressman. He began to petition that Hamilton be investigated for his misuse of foreign loans. Hamilton was forced to respond in lengthy reports that took most of his time, but he succeeded in absolving himself.

Jefferson then gave Giles a lengthy series of charges against Hamilton that Giles launched on Jefferson’s behalf, but without having to involve him publicly. The complaints ranged from abuse of the treasury to inappropriate etiquette in Congress. The House voted against Giles’s resolutions for further investigation. Jefferson’s plan had backfired. Hamilton demonstrated that he had never misused a cent of public money for private gain.