Cato V, Part XVI: Great Power Connected With Ambition

            The other scenario which George Clinton painted for his countrymen in the text of Cato V – in addition to his warnings as to the likely influence of America’s commercial development on the morals and convictions of its inhabitants – had to do with what he perceived to be the danger inherent in trusting American statesman not to abuse the authority vested in them by their constituents under the proposed constitution based solely on the assumption that Americans as a people were too virtuous by nature to ever incline towards tyranny. Such a conviction, he warned, was eminently foolish. Americans were not unique, he avowed. They did not possess some kind of preternatural ability to resist the same temptations which had been moving even decent individuals to commit egregious crimes against their fellow men for centuries. “When the manners and opinions of the community are changed by the causes I mentioned before,” he accordingly explained,

And your political compact inexplicit, your posterity will find that great power connected with ambition, luxury, and flattery, will as readily produce a Caesar, Caligula, Nero, and Domitian in America, as the same causes did in the Roman empire.

As with his previous prognostications concerning the likely inability of his fellow Americans to resist the temptations offered by an increasingly commercialized economy – with its easy access to credit, varied opportunities for speculation, and ample rewards for self-serving behavior – this kind of declaration was more than slightly at odds with the prevailing mood of the post-Revolutionary American community. Though the supporters and detractors of the proposed constitution nurtured very different opinions as to the propriety of creating a singular chief executive – the former believed Congress would offer sufficient resistance to executive overreach, the latter doubted that such arrangement would be sufficient – there nonetheless seemed to exist an undercurrent of agreement about the fundamental virtue of the American people.

Anti-Federalists, as aforementioned, tended to express this opinion in terms of the sacrifices that had just been made during the late Revolutionary War and the vigilance which the living owed to the dead. Patrick Henry, recall, stated in his address to the Virginia Ratifying Convention in June of 1788, “That spirit which has enabled us to surmount the greatest difficulties; to that illustrious spirit I address my most fervent prayer to prevent our adopting a system destructive to liberty.” In this same attitude, Mercy Otis Warren wrote in her Observations on the New Constitution that, “On these shores freedom has planted her standard, dipped in the purple tide that flowed from the veins of her martyred heroes; and here every uncorrupted American yet hopes to see it supported by the vigour, the justice, the wisdom and unanimity of the people [.]” In both of these cases, the evident intention was to remind the American people that they were too virtuous to permit the creation of a central government which would so obviously run counter to the spirit that they had but recently been given to express. Federalists naturally disagreed that the terms of the proposed constitution in any way stood counter to the values that had underpinned the Revolution, though certain of their stated explanations revealed an appreciation for the essential virtues of the American people that was not so different from that which was expressed by their opponents.

Yes, Alexander Hamilton explained in Federalist No. 73, the President would act as Commander-in-Chief of, “The army and navy of the United States, and of the militia of the several States when called into the actual service of the United States,” but this was, “So consonant to the precedents of the State Constitutions in general, that little need be said to explain or enforce it.” As the inhabitants of the various states trusted their elected legislators to restrain the relevant chief executive from abusing his military authority, so it seemed that Hamilton believed it entirely proper for the American people as a whole to take comfort in the fact that the chief executive of the United States of America would likewise be hampered in his ability to command the armed forces by the particular Representatives which they chose for themselves. Just so, writing in Federalist No. 74 of the treaty-making power to be wielded by the President and the Senate, Hamilton expressed an opinion of the trustworthiness of a singular executive which arguably would not have seemed out of place coming from the pen of one of his opponents. Attempting to explain why it was that the President was required to cooperate with the Senate in forging binding treaties with foreign powers, he accordingly admitted that,

  

An avaricious man might be tempted to betray the interests of the State to the acquisition of wealth. An ambitious man might make his own aggrandizement, by the aid of a foreign power, the price of his treachery to his constituents. The history of human conduct does not warrant that exalted opinion of human virtue, which would make it wise in a Nation to commit interests of so delicate and momentous a kind, as those which concern its intercourse with the rest of the world, to the sole disposal of a Magistrate created and circumstanced as would be a President of the United States.

The Senate – to be elected by the same legislatures of the various states in which so many of the Anti-Federalists vested their confidence and trust – would therefore serve the function of restraining the chief executive and guarding the interests of the American people.

As with the House of Representatives in its role of restraining the use of the powers of Commander-in-Chief, it was certainly possible that the membership of the Senate – or a simple majority thereof – might seek to conspire with the President in the furtherance of some shared objective. But just as the citizens of the various states seemed to believe that the representatives which they chose to speak on their behalf would act to prevent the relevant chief executives from abusing the authority with which they had been trusted, so, too, did Hamilton seem to believe that the two houses of Congress – their members also to be chosen by some portion of the American people – would fulfill this same function within the proposed national government. In this sense, while neither the critics nor the advocates for the proposed constitution seem to have had much faith in the ability of the individual to refrain from abusing whatever power happened to fall within their grasp, both groups nevertheless maintained a certain amount of faith in the American people as a whole – as well as in their chosen representatives – to prevent such abuses from taking place. These two factions may have disagreed as to the methods and mechanisms by which this sense of equilibrium was achieved – indeed they did disagree, vehemently – but few of people on either side seemed eager to deny that the surest guardians of the liberties of the American people were the American people themselves.

The fact of this apparent consensus is precisely what makes George Clinton’s commentary in the cited passage of Cato V so interesting. While he certainly seemed to admire the traits which the American people then believed that they possessed – “You are characterised as cautious, prudent and jealous in politics” he accordingly affirmed – he was also of the opinion that the American character was bound to change in the course of time. As he had stated previously in the text of Cato V, “Opinions and manners are mutable,” and in attempting to ascertain why it was that anyone among his countrymen would have willingly agreed to submit themselves to the authority of the proposed constitution when that selfsame document appeared to him to be characterized by a dangerous inexplicitness he pushed this same sentiment even further. “Is it because you do not believe that an American can be a tyrant?” he asked. “If this be the case you rest on a weak basis [.]” Without being able to say precisely why it was that Clinton was so outwardly pessimistic about the long-term prospects of the American people while most of his countrymen seemed comparatively quite hopeful – and leaving off a discussion of whether or not he was correct in his assessment until a point in the near future – it would seem worthwhile for the time being to delve into just what exactly he was trying to communicate. Specifically, Clinton’s references to “Caesar, Caligula, Nero, and Domition,” and to the Roman Empire as a whole, appear to bear at least some degree of explanation.

“Caesar,” of course, was meant to refer to Gaius Julius Caesar (100-44 BC), a Roman soldier and statesman whose boundless ambition ultimately brought about the collapse of the ailing Roman Republic and the emergence of a vigorously autocratic empire in its place. Owing to the speed with which he managed to bend the institutions of Roman public life to his will, his often stunning military successes, his dramatic demise at the hands of former allies, and the degree to which he rose to a position of unparalleled power through a campaign of populism and demagoguery, Caesar has understandably been a subject of both admiration and admonition from almost the moment of his death over two thousand years hence. Subsequent rulers of the Roman Empire turned his name into a title, thus bequeathing to the Germans, Austrians, Russians, Bulgarians, and Serbians their Kaisers and their Czars. William Shakespeare (1564-1616) wrote a play in 1599 called Julius Caesar, though in point of fact it was more concerned with the circumstances and aftermath of his assassination than with the man himself. And many 18^th century Americans, of course, when attempting to exhort their countrymen to confront a given threat to their rights and their liberties, used all that the name Caesar had come to represent among contemporary admirers of the ancient Roman Republic as shorthand for a kind of tyranny that derives its strength from popular discontent.

Mercy Otis Warren (1728-1814), for example, referred to Caesar in a negative light in her Observations on the New Constitution (1788) and also built much of the atmosphere and flavor of her earlier satirical drama The Adulateur (1772) on the circumstances of his rise and fall. As it happened, her brother James Otis (1725-1783), had also stated in his The Rights of the British Colonies Asserted and Proved (1764), in an attempt to caution a British political establishment increasingly inclined to station large numbers of regular troops in North America, that,

The danger of a standing army in remote provinces is much greater to the metropolis, than at home. Rome found the truth of this assertion, in her Sylla’s, her Pompey’s and Caesar’s; but she found it too late: Eighteen hundred years have roll’d away since her ruin.

Because his success was so often attributed to the popularity he enjoyed among the soldiers under his command, and to his use of populist reforms to curry favor with the masses, Caesar served a very useful symbolic purpose for 18^th century Anglo-Americans seeking to discredit what they perceived as either rampant militarism or the rise of political strongmen. And Caesar was very much the archetypal strongman. His strength was rooted in the armies he had under his command, he never seemed to fear using force to get what he wanted, and he sought legitimacy by adopting and promoting popular causes like land reform and lower taxes. By combining these characteristics, Caesar essentially made himself an object of both fear and seduction. He was feared because he was popular, and because he could use that popularity to rally the masses against whomever he identified as his enemy. And he was seductive because, owing to his habitual disregard for established laws and customs, he could give to his allies a great deal more than they could ever have expected if they chose to uphold the status quo.

            Granted, there hadn’t really been a figure in American history up to the late 1780s that much resembled Caesar, notwithstanding the warnings of people like the Otis siblings. James had warned of the emergence of a Caesar-like figure in North America resulting from Britain’s decision in the 1760s to station a large force of British regulars in the colonies. The person to which the elder Otis was referring was probably Thomas Gage (1718-1787), Commander-in-Chief of British forces in America from 1763 and colonial governor of Massachusetts from 1774. But while Gage certainly possessed some of the means to act in a Caesar-like fashion – inasmuch as he commanded a large military force at a significant distance from the authority to which he owed his allegiance – he lacked the popularity, the motive, or the opportunity. If he had sought to use his position to take control of British America at the point of a bayonet – an outcome for which, again, he showed no inclination – and then marshalled the resources newly at his disposal in order to invade and conquer Britain proper, it is doubtful he would have made it very far at all. Unlike in Caesar’s day, when politics and the military were essentially two sides of the same career path, military service wasn’t really seen as a viable avenue to political power in 18^th century Britain. On the contrary, a person tended to join the officer corps of the British Army or the Royal Navy because, as the second or third son of an otherwise prominent family, the military seemed like the only way to secure a position of honor and dignity for oneself while the elder sibling pursued a career in Parliament.

This was not the only factor preventing the likes of Thomas Gage from following the path to power laid out by Julius Caesar, of course. There were the differences in costs – Roman legionaries were paid out of the plunder secured by their general; British regulars were paid a salary supplied by the Treasury. And there were the differences in logistics – Caesar only had to move his invading army from Cisalpine Gaul (Northern Italy) to Rome; Gage would have had to cross the Atlantic. And there were the differences present in the larger political circumstances – the Roman Republic had been in the midst of a period of political instability since about 146 BC, punctuated by the rise of strongmen like Gaius Marius (157-86 BC), Lucius Cornelius Sulla (138-78 BC), and Gnaeus Pompeius Magnus (106-48 BC); Great Britain had been enjoying a period of stability and prosperity unseen since the early 17^th century. Thomas Gage, in short, was no kind of Caesar because the 1760s British Empire was no kind of Rome. And while James Otis was likely correct in assuming that he could arouse the attention of those of his countrymen who, like him, were familiar of the history of the Roman Republic by deploying the name of Caesar in his polemic assertion of the rights of the British colonists in America, the comparison which he was attempting to draw was demonstrably  a rather tenuous one.

Mercy Otis Warren’s attempts to deploy the specter of Julius Caesar in her aforementioned satirical drama, The Adulateur (1772), while perhaps theatrically effective, were in point of fact about as apt as her brother’s. The villain of the piece, Rapatio, Governor of Servia, is a vain and ruthless character based on the contemporary chief executive of colonial Massachusetts, Thomas Hutchinson (1711-1780). Though a native of Servia himself, Rapatio seems to care nothing for his country or its people, dreaming only of the rewards which he might reap by quashing all resistance to his absolute authority. Rapatio never compares himself to Caesar, however, nor indicates with his actions that Caesar’s is the model that he is seeking to emulate. That task is instead left to the characters of Gripeall, ruthless captain of the Servian military, and Hazelrod, Lord Chief Justice of Servia and Rapatio’s most outwardly sycophantic acolyte. In Act IV, Scene I, responding to Raptio’s elation at the prospect of crushing his adversaries and rewarding his faithful servants – “Hah, halcyon days!” he exclaims, “When every flying moment/Affords new scenes of joy; what though the soldier/True to my purpose hurls promiscuous slaughter” – the former responds by saying, “‘Twas nobly spoken -- there breathed the soul of Caesar.” Shortly thereafter, in Act IV, Scene III, the latter attempts to explain the regard he feels for his master Rapatio by declaring of him that,

            When the ties of virtue and thy country,

            Unhappy checked thy lust for power – like Caesar,

            You nobly scorned them all and on the ruins,

            Of bleeding freedom, founded all thy greatness.

Anyone even broadly familiar with either the history of the Roman Republic or William Shakespeare’s aforementioned presentation of the same would surely have been able to gather the significance of lines such as these. Rapatio, by the acclamation of his subordinates, was as ruthless as Caesar, as willing to draw the blood of his countrymen in the cause of personal enrichment, and as unmoved by the dictates of virtue or honor. But while Warren’s purpose in having characters close to Rapatio glowingly compare him to Julius Caesar would seem to be clear enough from a rhetorical standpoint, the connection between Caesar and Rapatio’s real-world counterpart, Thomas Hutchinson, is somewhat less distinct.

            Hutchinson, recall, was a native of Boston who succeeded to the governorship of the Province of Massachusetts Bay in 1769 at the conclusion of a lengthy course of service in both the legislative and executive branches of the contemporary colonial government. In 1737 he became a Boston selectman, in 1738 he was elected to a seat in the Massachusetts General Court, in 1754 he attended the Albany Convention– during which time he worked with Benjamin Franklin on an ultimately unsuccessful plan for a union of the Thirteen Colonies under continued British authority – and in 1758 he became Lieutenant Governor under the newly-appointed Thomas Pownall (1722-1805). Granted, the next dozen or so years saw Hutchinson’s popularity among his fellow colonists decline precipitously as time and again he sided with the Crown amidst the mounting crisis that came to dominate relations between Britain and the Thirteen Colonies during the 1760s and 1770s. Still, for all that his actions began to meet with popular discontent, neither his relationship with the Massachusetts General Court nor his relationship with Parliament much resembled that which existed in the final years of the Roman Republic between Julius Caesar and the Roman Senate. Caesar was a strongman, as aforementioned; a rabble-rouser who was perfectly willing to throw his weight around to get what he wanted. The Senate being at that time a bastion of conservative social and political thought, it members accordingly tended to balance indulging Caesar – given his undeniable military and popular strength – and keeping him at arms’ length. Thomas Hutchinson, by comparison, was a temperate, steady-minded public servant who never seemed particularly inclined to threaten anyone, almost always deferred to the authority of Parliament, and seemed to prefer sober discussion to radical action of any kind. It might be argued, perhaps, that he shared with Caesar an underlying intention to betray the best interests of Massachusetts in favor of enhancing his own position. But if Hutchinson was indeed a traitor to Massachusetts – and this is arguable at best – he was simultaneously an ardent loyalist in the eyes of Parliament and the Crown. No such plaudits could be laid at the feet of Caesar, whose highest loyalty seemed always to be to himself.

            In point of fact – and notwithstanding what the Otis siblings were inclined to say on the matter – the single person in the late 18^th century United States whose situation most closely resembled that of Julius Caesar was almost certainly George Washington. He was not much of a strongman, to be sure, being far too cautious, restrained, and outwardly humble to demand much in the way of autonomy or power from either Congress or the American people. Indeed, whereas Caesar actively pressured the Roman Senate to enlarge and extend the terms of his military governorship in Gaul following his first year as Consul in 59 BC, Washington made a point of resigning his commission as Commander-in-Chief of the Continental Army at the earliest possible moment after the final evacuation of British troops from American territory in the waning months of 1783. Likewise, Washington resisted being made the first President of the United States in 1789 – preferring, by his own affirmation, to spend his remaining years amidst the “domestic felicity” of Mount Vernon – and being re-elected to that same office in 1792. Notwithstanding such a well-attested aversion to the approbation of his countrymen and the authority that often came with it, however, the primus inter parus of the Founding Generation would nevertheless have been well-suited and well-equipped to overturn the legitimacy of Congress and the sovereignty of the states by way of appeals to military might and popular affection.

Cato V, Part XV: The Operations of Commerce Amongst Individuals, contd.

One of the primary results of the rapid expansion of the number of corporate entities operating in the United States of America between the 1780s and 1810s – the purchasable shares and issuable credit of which represented wholly novel sources of wealth – was, perhaps unsurprisingly, the growth of financial malfeasance and an increase in the frequency of economic crises. In part, this was the result of the central role occupied by the Bank of the United States in the post-Revolutionary American economy. On one hand, the easy access to large sources of credit that the incorporation of the Bank of the United States facilitated – both on its own and by fostering the creation of other lending institutions – made it far too tempting for a certain type of American merchant-adventurer to resist the promise of turning a quick profit at minimal expense. And on the other, the Bank had become so instrumental to the international and domestic credit of the United States of America so quickly that even relatively minor shocks to its public standing could have series consequences for borrowers and creditors alike. In 1792, for example, former Assistant Secretary of the Treasury William Duer (1743-1799) helped precipitate the first substantial economic crisis in American history when his efforts to reap personal profit by speculating in government bonds using the knowledge he had gained in public service resulted in the sudden collapse of the securities market. Investors panicked and attempted to withdraw their deposits from the Bank of the United States, leading its directors to sharply restrict its overextended credit, leading to more panic, more selling, the cancellation of construction projects, the loss of countless jobs, and a general drop in the prices of domestic goods. Hamilton, as Treasury Secretary, managed to stabilize the economy and stave off a full-blown recession by securing the government purchase of over one hundred thousand dollars’ worth of securities, but this proved only a temporary remedy. Another crisis was just around the corner.

Unlike the aforementioned Panic of 1792 – which was successfully contained before it did an excessive amount of damage to the United States economy – the Panic of 1796-1797 represented a major recession whose aftershocks echoed into the beginning of the 19^th century and in whose wake a number of prominent merchant firms and financiers were left in utter ruin. Whereas the earlier market crash was precipitated by an overextension of credit and a purposeful attempt on the part of a handful of investors to artificially inflate the price of government securities, however, the crisis which served to undermine the economic confidence of the United States through the end of the 18^th century centered on the more familiar practice of land speculation. Seeking to rebuild their shattered fortunes following the Panic of 1792, a cohort of speculators like Duer – a group which included the aforementioned Robert Morris and a Boston merchant named James Greenleaf (1765-1843) – set their sights on the booming land market which they believed was sure to precede the movement of the United States capital city from Philadelphia to Washington City in the year 1800. The scheme, as these men devised it, was intended to be a relatively simple one.

Using grants that they had purchased by way of domestic bank loans, Morris and Greenleaf formed the North American Land Company, the purpose of which was to sell stock to European investors on the promise of an increase in the value of the aforementioned grants. When events in Europe effectively forestalled this initial effort – namely the ongoing war between the newly-established French Republic and most of its neighbors – the directors of the Company then turned their attention to the domestic market, issuing notes in their own name as a way of financing their continued activities. Because Morris was then thought to be among the wealthiest men in the United States, this script was widely regarded as a very stable investment. When people started to speculate in the value of these notes, however, and when it became clear that the conflicts then raging across Europe were not likely to abate in the near term, the resulting trans-Atlantic credit crunch brought the whole scheme tumbling down. Unable to pay their creditors, and with the notes issued in the name of the North American Land Company – a paper fortune totally some ten million dollars – trading at less than twenty percent of its stated value, Morris and Greenleaf were each remanded to debtors prison. The NALC shareholders lost almost everything they had invested, resulting in a string of business failures and job losses, the effects of which were further exacerbated by the simultaneous instability of European markets and the accompanying constriction of credit. Economic growth in the United States consequently remained sluggish for the rest of the century as investors and creditors alike remained skittish and interest rates remained high.

Reflecting on the circumstances of these early bouts of economic instability, it would seem prudent to differentiate between the kind of luxury which George Clinton was actively disparaging in the cited text of Cato V and that which he made no comment on whatsoever. Clinton, after all, was a Republican – or would be, at least, once that faction took shape by the end of the 1790s. He was accordingly, as a fellow believer in the rights of the states over the authority of the national government, an ally of Virginia planters like Thomas Jefferson and James Madison. In spite of the self-conscious opulence with which these men – and others of their class – took great pains to surround themselves, however, Clinton was most certainly not referring to the habits of the Southern gentry when he declared in the third paragraph of Cato V that luxury was, “The parent of inequality, the foe to virtue, and the enemy to restraint [.]” The reason for this – in addition to political expediency – was almost certainly because the pseudo-aristocrats of Virginia, Maryland, the Carolinas, and Georgia fitted into the same basic category in Clinton’s mental universe as did the yeoman farmers that dominated agriculture in the North. The planters were exceptionally wealthy, as a class, and great lovers of material comfort, ostentation, extravagance, etc. They built massive houses, and wore the best clothes, drank imported wine, and raced horses. Luxury, in essence, was their byword. But the source of their wealth, like that of any other farmer, was clear and explicable. They planted, their harvested, their sold their goods on the market; they owned land, their owned livestock, they owned storage facilities, they owned slaves. But all of it was solid, and real, and quantifiable. Their wealth could therefore be thought of as tangible; the product of labor – if not necessarily their own – rather than fantasy. Sometimes, yes, they were forced to take out loans. And some of them, yes, ended up deeply in debt by the end of their lives. But credit on its own wasn’t the basis of their wealth. The same could not be said of the merchants and financiers whose attempts to turn confidence into profit in the 1790s wrought so much damage to the American economy.

While the basis of the personal wealth of someone like Robert Morris was solid enough in theory – Morris being a merchant by trade – the degree to which his lifestyle was backed by promise, speculation, and risk was in practice quite alarming. Not only did he frequently issue promissory notes in either his own name or that of whatever enterprise he was involved in at the time – with the intention, presumably, of collecting on the success of whatever speculative venture he was backing – but he also borrowed widely in order to finance his own schemes, racking up a tremendous amount of debt by the time of his death in 1806. By way of evidence, consider the findings of the bankruptcy commission assigned to his case upon his release from debtor’s prison in 1801. All told, upon consolidation, the obligations held by Morris in October of that year were certified to amount to almost three million dollars. Thomas Jefferson, who also ended his life in debt in 1826, owed the comparatively paltry sum of one hundred thousand dollars. Clearly, then, while both of these men could be said to have lived lives of comfort, luxury, and even ostentation, the basis of their respective lifestyles were fundamentally unalike.

Thomas Greenleaf – the aforementioned partner of Morris in the North American Land Company – serves as a similar case in point. Eager to turn a profit on the relocation of the capital of the United States to the banks of the Potomac, Greenleaf purchased land grants in Alexandria, Georgetown, and on the Anacostia River at a frankly stunning rate over the course of the middle 1790s. Three hundred lots there, two hundred and forty there, another thousand after that; by 1794, pursuant to the rules set by the federal commission responsible for selling land in the future Washington City, Greenleaf personally owned something like one-third of all the buildings then for sale in the District of Columbia. And while the debts that accompanied these purchases were indeed substantial – nearly all of them owed to Dutch financiers – all that Greenleaf theoretically had to do to stay ahead of them was sell the right assets at the right time. The only hitch, it turned out, had to do with the manner in which the land in question was being bought. Greenleaf, as aforementioned, was dealing with Dutch financiers, promising them a favorable return on their investment if they agreed to fund his purchases of cheap – but soon to be valuable – land in the federally-designated capital district. Owing to the state of late 18^th century trans-Atlantic communications infrastructure, of course, Greenleaf couldn’t just request a loan, wait for approval, and then make the necessary purchase. In the intervening months, the lots which he intended to purchase might have been snapped up by someone else, or else increased in value beyond what he thought it sensible to pay. And so, secure in his belief that recompense was forthcoming, Greenleaf instead bought the Potomac lots on credit with the intention of paying what was owed once his Dutch funds inevitably materialized.

The trouble with this scheme, of course, was that it happened to coincide with a particularly volatile era in the history of Western Europe. Not only did the aforementioned invasion of the Netherlands by the armies of the revolutionary French Republic in March of 1794 cut off access by foreign speculators like Greenleaf to the Dutch credit market, but the broader war between France and its neighbors almost completely foreclosed on the possibility that any Western European investors might take on even a particularly safe trans-Atlantic venture for the foreseeable future. And while the formation of the North American Land Company was intended by its chief investors – Greenleaf, Morris, and a Pennsylvanian named John Nicholson – to stave off looming disaster by a pooling of assets and resources until the crisis in Europe abated, the collapse of all three men’s fortunes was already in the offing. Financial sleight-of-hand and confidence tricks notwithstanding – by which the trio co-signed each other’s loans, endorsed each other’s personal notes, sold their shares, created trusts, and generally attempted to conjure cash from thin air – the ability of Greenleaf and his partners to raise any money at all very quickly disappeared. Even the land in which Greenleaf had sunk most of his net worth – a figure totally some five million dollars by 1796 – was beginning to lose its value. Unable to sell lots fast enough or at high enough prices to stay ahead of his debts, Greenleaf went so far in his desperation as to offer Alexander Hamilton – since retired as Secretary of the Treasury – one million dollars if he would lend his reputation for financial probity to Greenleaf’s bid to borrow more money. Hamilton understandably refused, and by October, 1797, Greenleaf was in debtor’s prison in Philadelphia, no longer able to raise a single dollar.

To be entirely fair to the likes of Thomas Greenleaf and Robert Morris, some degree of risk is unavoidable when one attempts to engage with a market-based economic system. Thomas Jefferson may not have been in the business of borrowing money solely for the purpose of funding some venture or other which he could only hope would bear fruit, but uncertainty was still very much a part of his livelihood. Sometimes crop prices went up, and sometimes they went down; sometimes the harvest was plentiful, and sometimes there was a blight; sometimes land purchased on credit yielded profit within a season, and sometimes it languished for years before returning even its initial cost. The difference, however, between the kinds of risks that the Jeffersons and Madisons of the 18^th century world tended to take on and those which seemed to form the stock and the Greenleafs and Morrises – from the perspective, at least, of someone like George Clinton – was that the commodity being offered by the planter class of the American South at least seemed to possess some kind of inherent value separate from what the market was willing to pay at a given moment. Entire industries had grown to rely on access to American tobacco, rice, indigo, and sugar, and would likely have collapsed if that access was cut off entirely. War might affect what purchasers were willing to pay, or the cost of insurance, or the demand for a particular crop, but it would doubtless have seemed to be next to impossible that tobacco would completely cease to be of any value whatsoever. The same could not be said of the commodities that the likes of Greenleaf and Morris attempted to peddle.

Ostensibly speaking, land was the physical good which Thomas Greenleaf and Robert Morris worked so hard to purchase and re-sell during their turn towards speculation in the middle 1790s – a good whose value, to the late 18^th century Anglo-American mindset, was more or less unquestionable. But what they were actually in the business of offering to their backers was the promise of greater wealth. Land was simply a means to an end; a medium of exchange; an alchemical apparatus whereby small investments could me metamorphosed into massive profits. Greenleaf’s purported Dutch investors could almost certainly not have cared less what became of the lots that were being purchased with the funds that they contributed, any more than Greenleaf probably cared himself. What mattered to all involved were the gains to be realized from the buying and selling thereof. Granted, the strength of these gains might well be motivated by real improvements made to the commodity in question. As aforementioned, Greenleaf was required by the commission responsible for selling lots in the federal district to construct buildings upon the same so as to prepare the future capital city for large-scale inhabitation. But there was also – indeed, there remains to this day – a great deal more to the value of real estate than just an objective appraisal of the product itself. Rumor, hearsay, promises, threats, fear-mongering, flattery, and corruption can all contribute to raising or lowering the market value of a parcel of land far above or below the rate at which it would sell under normal conditions. Naturally – being speculators – this is what Greenleaf and Morris were counting on.

The land which they purchased on the Potomac would have been worth something regardless of whether Congress had adopted the Residence Act (1790) or not, but its value increased significantly once news began to spread that the seat of the United States Government would be relocating to that same region of the Upper South at by at least the year 1800. Now imagine if Greenleaf and Morris learned that the Residence Act was set to pass before the vote was actually taken and accordingly rushed to purchase land on the Potomac while it was still quite cheap. And if rumors began to circulate that the national government would need far more land than initially anticipated to house its various institutions and departments. And if word began to spread that the date of relocation had been moved up from 1800 to 1798. How much profit would the directors of the North American Land Company stand to make, and at what cost? A little construction here, a few rumors there, a favor called in, and suddenly land which was bought for a pittance is selling at ten times its original value. It was all extremely fragile, of course; all based on confidence, and lies, and hopes, and promises. If a scheduled loan failed to materialize, or if someone attempted to call in a debt unexpectedly, the whole scheme would almost certainly collapse. But so long as everyone believed what they were told and let the middle men get on with their business, the dividends to be realized would far exceed the costs.

This attitude towards wealth creation was also certainly what George Clinton was objecting to in the cited passage of Cato V. It was not luxury in itself that he feared would spell the degeneration of his countrymen’s moral character, for he seemed to take no issue – at the time of writing or in the years to come – with the self-conscious ostentation widely practiced among the planter class of the American South. Rather, it was the growth of the kind of luxury that was wrought by speculation with which he more than likely took issue. The probable reason for this, as explored above, was that planters and speculators each had very different relationships to the market and to the commodities that they were selling. A planter, like any farmer, was to some extent at the mercy of the market, forced as they were to sell their produce at whatever price they could manage come harvest. Sometimes demand was high and the price was good, sometimes supply was high and the price was bad. In either case, whether it was due to war, blight, drought, overplanting, or any number of other factors, the planter could only exercise a modicum of control over how the commodities they had to sell would be received. A speculator, by comparison, could manipulate the market in order to extract more value from whatever good it was they were selling. Indeed, that was half of the point of speculating to begin with. Prices were supposed to fluctuate according to rumors and promises, staying low when one wanted to buy and rising as high as possible when one wanted to sell. The means by which these fluctuations were achieved didn’t really matter; nor, indeed did the nature of the thing that was actually being sold. The mercenary attitude that was bound to result from this kind of thinking was doubtless what Clinton was attempting to warn against when he called luxury, “The foe to virtue, and the enemy to restraint [.]” By the very nature of their business, a speculator had no cause to be either virtuous or restrained. Their livelihood relied on their ability to extract as much value from an asset as possible. If lying would accomplish this, or fear-mongering, or making deals with public officials, what possible reason would they have to do otherwise? Why should they restrain themselves when easy wealth was only a rumor away?

As the events of the panics of 1792 and 1796 have hopefully made clear, George Clinton was exactly right to be wary of the side-effects of the increasing commercialization of late 18^th century American society. Prior to the 1790s, excessive luxury had been available mainly to those whose livelihoods were dependent on the cultivation of real property and the sale of renewable but finite natural resources – a position which both tied them to a particular geographic and cultural milieu and left them at the mercy of a market they couldn’t control. But the creation of a national bank and the resulting expansion in the number of chartered corporations in the states placed the promise of excessive wealth and ostentation within the reach of anyone charming enough to talk their way into a line of credit and ruthless enough to create a bubble economy from which they stood to benefit and many more stood to suffer. Not only did this tend towards a much greater degree of economic instability than had previously been the case – the after-effects of which tended to reverberate outward a great distance from wherever they originated – but it also arguably represented an imminent danger to the stability and the quality of republican government in America.

The source of said danger, as Clinton described it, was essentially twofold. On one hand, he affirmed, the, “Ambition and voluptuousness” wrought by the increasing commercialization of American society was bound to, “Teach magistrates, where limits are not explicitly fixed [,] to have separate and distinct interests from the people [.]” The logic behind this statement is plain enough on consideration. In the event that corporations multiplied in the states, sources of credit sprang up all over the country, and speculation became the norm, it would stand to reason that the interests of financiers and public servants might at some point coalesce. If charters could only be granted by government fiat, then legislators were bound to attract the attention of those who possessed the capital to form corporations but lacked the necessary legal authority. And with so much to gain in exchange for a simple “yea” – favorable loans, parcels of shares, lavish gifts, or simple cash bribes – why shouldn’t the lawmakers in question cooperate? Why shouldn’t they grant every request for incorporation made to them regardless of the degree to which the resulting entity would really serve the public welfare? For that matter, why shouldn’t these selfsame officials take it upon themselves to form corporations? In partnership with administrators and financial backers they could very easily become very wealthy, particularly if the corporation they helped to found ended up doing a great deal of business with the government to which they belonged. And though their mandate as a public servant may at length expire – due to term limits – or be overturned – due to defeat at the polls – the commercial privileges which they made sure to extend to themselves would ensure that their power and their influence would outlive their tenure in office. Indeed, it would seem to be a very foolish legislator who didn’t pursue such opportunities during their term of service. Though their actions may well constitute a betrayal of the trust vested in them by their constituents, and an abrogation of their oath to serve, “As a faithful honest representative and guardian of the people,” the ratio of potential rewards to the effort required to achieve them would appear far more favorable than whatever might be gained by standing on principle.

Reasoning such as this would seem to cut to the core of the second source of danger which Clinton ascribed to the inevitable commercialization of American society. “It will not be denied [,]” he wrote, “That government assimilates the manners and opinions of the community to it.” The growth of the number of opportunities for corruption and individual enrichment were problem enough in the meantime, leading as they surely would to the bifurcation of the responsibilities of public servants between serving their constituents and serving themselves. But only with time would the resulting connection between public office and private wealth become habitual. Perhaps, in the immediate, enough legislators who had lived through the Revolution, imbibed its ideals, and entered public service seeking to do justice to its example would restrain themselves from taking undue advantage of their power to incorporate and thus prevent republican government in the United States of America from becoming primarily an instrument of private enrichment and oligarchical privilege. Eventually, however, because, “Opinions and manners are mutable,” the commercialization of American society might advance to the point that every citizen of the United States would take it as their God-given right – if not, indeed, their sacred duty – to seek after every personal advantage on which they may possibly lay their hands. In a social atmosphere such as this – in which the pursuit of profit has become second nature amidst a proliferation of commercial enterprises and the sanctification of luxury – what reason would anyone have for second-guessing either their own selfish impulses of those of their fellow Americans? Of course, people brought up in such a world might come to tell themselves, it was acceptable for people nominally elected to preserve and promote the public welfare to take every opportunity to line their own pockets. Was that not the entire function of government, to facilitate the pursuit of profit above all else? To give every person lucky enough, ruthless enough, or cunning enough to gain access to its prerogatives the ability to become fantastically wealthy at the expense of their countrymen? Is that not what the Revolution was all about?

George Clinton did not think so, as the cited text of Cato V would seem to attest. His vision of what the United States of America should at length have become was summed up quite effectively in his description of a so-called, “Well-digested democracy [.]” Such a system, he avowed, “Has this advantage over all others, to wit, that it affords to many the opportunity to be advanced to the supreme command, and the honors they thereby enjoy fill them with a desire of rendering themselves worthy of them [.]” Thus, in Clinton’s mind, equality of opportunity should have been joined with the encouragement of self-sacrifice. Power was not a means to an end, but rather a means to be of service to others. Such sentiments, unfortunately, could not be counted on to endure for all time. The American people may have been, “Cautious, prudent and jealous in politics [,]” at the time that Cato V was published in New York in November, 1787, but, “Americans are like other man in similar situations [,]” and so were unlikely to remain that way indefinitely. Plans were wanted, therefore, if the frame of government then being examined by the citizens of the American republic was actually adopted and entered into force. Precautions had to be taken, failsafes devised, so as to ensure that future generations of Americans more concerned with luxury than liberty would not be permitted to wholly undo the legacy left to them by their forebears and thereby sink themselves into a morass of iniquity and despotism. Was Clinton exaggerating? Was he being alarmist? Was he wrong to doubt the enduring virtue of the American people? As the events of the 1790s, and the hypothetical scenario posited in the penultimate paragraph in this present entry strongly indicate, he most certainly was not. In more ways than one, in fact, George Clinton seemed to see the world that his countrymen would come to inhabit more clearly than some of us can see what transpires in front of our faces every day. 

Cato V, Part XIV: The Operations of Commerce Amongst Individuals

            Besides his evident lack of romanticism as to the resilience of American virtue, and his lack of optimism as to the fate which likely awaited the American people, the aspect of the warnings which George Clinton issued to his countrymen in the text of Cato V that is of particular interest in hindsight is the degree to which subsequent events seemed to prove out his prognostications. Consider, to that end, just what it was that Clinton claimed would transpire if certain trends which he observed as being likely to progress further were allowed to reach a point of conclusion. “The progress of a commercial society begets luxury,” he wrote, “The parent of inequality, the foe to virtue, and the enemy to restraint; and that ambition and voluptuousness aided by flattery, will teach magistrates, where limits are not explicitly fixed to have separate and distinct interests from the people [.]” Clinton, it seemed, was of the opinion that commerce was fundamentally an instrument of moral corrosion, and that as it came to dominate a given society the result was bound to be a steady decline into iniquity and self-indulgence. It was a dour prediction, to be sure, and not the only one which the text of Cato V contained.  In that same passage, Clinton went on to level the even more damning claim that,

 

Americans are like other men in similar situations, when the manners and opinions of the community are changed by the causes I mentioned before, and your political compact inexplicit, your posterity will find that great power connected with ambition, luxury, and flattery, will as readily produce a Caesar, Caligula, Nero, and Domitian in America, as the same causes did in the Roman empire.

Was Clinton exaggerating? Was the American republic doomed to follow the path of its Roman predecessor in the event that the citizens thereof acceded to the proposed constitution then being considered? Many of Clinton’s countrymen would doubtless have rejected such warnings out of hand. Not only had the American people already shown themselves to be too sensitive of their liberties and too jealous of their rights to ever trade them for material comforts and flattering words, but the terms of the constitution then being scrutinized in the various states in no way indicated that such a bargain was even possible. Why, then, should anyone have feared the corruption of American morals and the degeneration of its government? What could the likelihood possibly have been of something so bizarre actually taking place?

As it turned out, Clinton’s grim predictions were not so ludicrous after all. By the summer of 1788, the number of states required to ratify the proposed constitution for the system of government described therein to be formally adopted – i.e. nine of thirteen – had been met. By February of 1789, the ballots for the first United States Presidential Election were being tallied. By the end of 1790 the full thirteen states had voted to ratify; by 1791 they had been joined by a fourteenth (Vermont). This may seem a harmless enough progression of events on its own, but it was what these events heralded that spoke to Clinton’s fears. In the years that followed, a national bank was chartered amidst vitriolic debate between its supporters and detractors; a mounting war in Europe defined and solidified emerging partisan interests; a needless war was nearly fought; an election nearly devolved into armed conflict between domestic factions; and an equally needless war was actually fought that nearly bankrupted the nation. Then another bank was chartered, and domestic factionalism reached new heights, and another election gave way to horse-trading, and the people chose a brawling, irascible malcontent as their Commander-in-Chief and applauded every time he treated the law with contempt. And while Clinton himself did not live to see a fair portion of these things – having died in 1812 at the venerable age of seventy-two – none of them took place more than fifty years from the time he offered his aforementioned warnings in the late autumn of 1787.

This is all a lot to process, of course; a lot to consider; a lot to unpack. For the sake of clarity, then, let’s return for the moment to Clinton’s cited complaints about what he perceived to be the likely social effects of the development of American commerce. What he said, in the aforementioned passage of Cato V, was that, “The progress of a commercial society begets luxury, the parent of inequality, the foe to virtue, and the enemy to restraint [.]” Well, American society did progress commercially in the years that followed the publication of Cato V in November, 1787, and at a remarkably hurried pace. In 1791, pursuant to a compromise with opponents of the plan in the House of Representatives, Secretary of the Treasury Alexander Hamilton – who had previously aided in the creation of the aforementioned Bank of North American in 1781 – succeeded in securing the incorporation of the Bank of the United States for the purpose of consolidating the national debt and providing a source of national credit. In the report which he prepared and submitted to Congress wherein he recommended this course of action, Hamilton made it exceptionally clear what function he felt a national bank could, and should, perform. “The tendency of a national bank,” he wrote, “Is to increase public and private credit. The former gives power to the state for the protection of its rights and interests, and the latter facilitates and extends the operations of commerce amongst individuals.” Hamilton’s free admission of the private, commercial benefits to be derived from the incorporation of a national bank are especially noteworthy. In 1787, George Clinton had attempted to warn his countrymen against adopting the proposed constitution by arguing that as American society developed commercially it would become increasingly likely in proportion that the powers allocated to the resulting national government by that selfsame document would be subject to abuse. And here, less than four years later, was the Treasury Secretary of the very same consolidated government whose creation Clinton had opposed advocating for the use of public authority in order to facilitate, “The operations of commerce amongst individuals.” No doubt the author of Cato V rued that particular day.

Matters proceeded swiftly thereafter. With the government of the United States of America now in the business of selling securities, and the resulting credit boom facilitating the creation of any number of private business ventures, the relationship between commerce and public life began to alter dramatically. Whereas public opinion prior to the Revolution had held the concept of chartered corporations – with the Thirteen Colonies themselves – in no small degree of contempt for the way in which they appeared to both sanction and facilitate social inequality by granting special privileges to a small subset of the general population, Americans in the 1790s, 1800s, and 1810s were increasingly of the opinion that more lenient incorporation laws were preferable to those that were more restrictive. Paradoxical though such a turn may seem, however, this was in large part a pragmatic development. While the various state governments, as well as the nascent national government, had generally been eager to take an active role in transforming American society along distinctly republican lines in the years that followed the end of the Revolutionary War in 1783 and the ratification of the United States Constitution in 1788, they were also very reluctant to raise taxes to an extent that would generate sufficient revenues to pay for all of the initiatives that they had hoped to pursue. The solution to this evident impasse was a reluctant turn towards the use of publicly-chartered corporations. Though criticized, as aforementioned, for facilitating inequality and corruption – see, for example, the South Seas Company – corporations were undeniably a proven means by which private capital could be placed at the service of the public welfare. For such institutions to become an accepted tool of public policy in the post-Revolutionary United States, however, there would need to be some degree of adaptation.

The creation of the Bank of the United States in 1791 was almost certainly an essential step in this process. By bestowing the legal and moral blessing of the newly-established national government – and, by extension, the blessings of the elected representatives of the various states – upon the concept of incorporation, the Washington Administration and its supporters in Congress effectively gave notice that the awarding of specific privileges to a private enterprise was did not necessarily constitute a betrayal of the ideals that had lately underpinned the American Revolution. The shareholders and directors of the Bank of the United States, while indeed possessed of a set of collective benefits otherwise unavailable to the mass of their fellow countrymen, performed a useful public function in exchange, the value of which to the American republic as a whole tended to outweigh whatever inequalities said benefits potentially served to foster. The various universities which had been incorporated in the Thirteen Colonies during the colonial era partook of this same basic exchange – i.e. private benefits for public value – as did municipal corporations like the cities of Philadelphia, Boston, New York, and Baltimore. The Mayor of New York undeniably possessed a set of privileges that were unavailable to his fellow Manhattanites; as did the members of the Common Council; as did the city’s Comptroller. But because each of these individuals – in their official capacity – performed a useful function on behalf of the city’s other inhabitants, and because they were each of them elected to their particular office the degree to which their statutory powers perpetuated a kind of state-enforced personal inequality was arguably forgivable. The Bank of the United States may not have been a municipal corporation or a university – and nor were its individual shareholders and officers elected to their positions – but it also wasn’t a hereditary body whose function was only to enrich its members. Its intended function had been well and clearly explained by its architects, and membership therein was available to any and all who could afford to purchase its stock. Granted, this latter characteristic most definitely placed the Bank farther beyond the reach of the average American than, say, Congress, but it was evidently not a condition so offensive to republican sensibilities that the American people couldn’t see their way clear to accepting it.

Not everyone did accept it, of course, either during the debates that preceded the incorporation of the Bank or in the years that followed its initial establishment. Thomas Jefferson, for example, whose abhorrence of banking and commerce has since become legendary, argued strenuously against the adoption of Hamilton’s plan by Congress in his capacity as Secretary of State in the Washington Administration. Writing in a report to the House of Representatives on February 15^th, 1791 in an effort to defeat Hamilton’s efforts, the Sage of Monticello asserted, among others things, that the incorporation of a national bank – with the intention of operating at the behest of the national government and within the jurisdictions of all of the various states – would amount to an unconstitutional attempt by Congress to lend the directors of said bank, “A power to make laws paramount to the laws of the States; for so they must be construed, to protect the institution from the control of the State legislatures; and so, probably, they will be construed.” It also appeared to Jefferson that the advocates for the incorporation of a national bank desired that Congress should give to that institution, “The sole and exclusive right of banking under the national authority; and so far is against the laws of Monopoly.” The result of such a grant of authority, he went on to explain, would effectively render the American people, “Bound to the national bank, who are free to refuse all arrangement, but on their own terms, and the public not free, on such refusal, to employ any other bank.” Taking Jefferson’s reckoning of matters as fact, the privileges which would have devolved upon the officers of the bank would accordingly appear to be both vast and ill-defined. They were expected to operate within the states but outside of their authority, free from competition, and at the behest only of Congress and the President. And while these latter entities were to be subject to popular election, it was also far from inconceivable that the chief executive of the American republic and its legislative officers should have become shareholders themselves whose personal interests lay in perpetuating the authority of the proposed national bank rather than in any way checking its activities.

Granting the cogency of Jefferson’s arguments, it has already been established that he was unsuccessful in his efforts to prevent the incorporation of the Bank of the United States. Hamilton’s case was ultimately the more convincing of the two and the Bank officially came into being on February 25^th, 1791. And while Jefferson’s response was essentially to begin plotting the institution’s destruction – an outcome which was ultimately achieved in 1811 when none other than George Clinton himself, then Vice President of the United States, cast the tie-breaking vote against the renewal of the Bank’s charter in the Senate – the majority of his countrymen seemed instead to embrace the opposite path. Rather than continue to oppose the very idea of corporations like the Bank on principle as being elitist, monopolistic, and fundamentally un-American, legislators in the states began cooperating with various private interests to essentially dilute the exclusivity of corporate privileges by making corporate charters much easier to obtain than had ever before been the case. Whereas – by way of example – no more than a half-dozen corporate charters had been granted to private business during the whole of the colonial era – roughly 1607 to 1775 – the various states collectively granted eleven charters between 1781 and 1785, twenty-two between 1786 and 1790, one hundred and fourteen between 1791 and 1795, and fully one thousand eight hundred between 1800 and 1817. The idea, as remarked by state legislators during this same period as well as by ordinary Americans, was to prevent exactly the kind of monopolization that Jefferson had so vehemently decried.

If corporations were indeed necessary to the achievement of the various social and economic goals of the post-Revolutionary American political community, it was held, then let the privileges thereof be spread as widely as possible to as many entities as possible. Not only did this category include banks – of which the states would at length begin to incorporate their own – but also insurance companies, manufactories, construction firms, and the managers of public infrastructure and utilities. The resulting proliferation of corporate entities not only served to dispel the notion that the holders of a corporate charter were possessed of something which set them apart from their contemporaries, but the resulting competition between said entities was thought to be of direct benefit to the American people as a whole. As a New York City commission responsible for issuing ferry leases put it in 1805, “The only effectual method of accommodating the public is by the creation of rival establishments.” Rival bakeries made bread cheaper; rival banks made loans easier to obtain; and competition in general made it clear to all who cared to observe that being sanctioned by the state in no way implied narrow legal preference or moral superiority.

Cato V, Part XIII: Popular and Bewitching Colours, contd.

Just as the authors of Cato’s Letters, John Trenchard and Thomas Gordon, had decried the manner in which succeeding British governments appeared intent on using the lure of luxury and material comfort as a means of distracting the general population from objecting to – or even noticing – the steady erosion of their fundamental liberties, so too did George Clinton apply himself in the text of Cato V to the task of warning his fellow countrymen that an increased attachment to the extravagance wrought by the growth of commerce was bound to lead to the degeneration of the American character. Granted, it would have been possible for Clinton to have come to this same conclusion without having ever encountered Trenchard and Gordon’s earlier commentaries. He was not, as aforementioned, a man of business himself, and thus had no personal reasons for viewing the expansion of America’s commercial economy with favor or fondness. That being said, the fact that he chose to sign the pseudonym “Cato” to the same anti-constitutional missives in which – in at least one of whose number – he expressed sentiments that aligned rather closely with those given voice in Trenchard and Gordon’s aforementioned commentaries would seem to indicate the presence of something more than coincidence. Like the authors of Cato’s Letters before him, Clinton saw what was transpiring in his homeland and sought to warn his fellow citizens as to the dangers they faced as a result. Where the latter differed from the former, however, was in the intention by which they issued their respective warnings.

  

Writing as they were in the early 1720s, the single event which could be said to have most powerfully influenced the efforts and sentiments of John Trenchard and Thomas Gordon was more than likely the establishment of the Bank of England some thirty years prior in 1694. A direct result of England’s decisive defeat by France at the Battle of Beachy Head (1690) during the Nine Year’s War (1688-1697), the chartering of the Bank was intended to permit the cash-strapped and credit-poor government of William III (1650-1702) to raise sufficient funds to wholly rebuild the Royal Navy and thereby reestablish England as a global power. By most conventional economic measures, the effort succeeded spectacularly. Not only was the desired sum of just over one million pounds raised in less than two weeks, but the resulting course of government spending proved a tremendous boon to several key sectors of the English economy. The shipbuilding industry was obviously the primary recipient of government largesse, the increased demand for naval vessels resulting in the need to employ a great many more craftsmen and laborers than had ever before been the case. But so too did sailmakers enjoy a sudden increase in demand for their products, along with the makers of rope, and nails, timber, pitch, and cannons. Even farmers benefited, the Navy’s vastly expanded personnel requiring an appropriate expansion in the nation’s yearly agricultural output. War – or even the just the preparation for it – was evidently very good for businesses of all manner of description, and the Bank of England was the seat and source of the requisite funding. Despite the economic growth that the institution fostered, however, there were certain aspects to the way that Bank functioned that were cause for concern among the era’s less sanguine observers. 

  

For one thing, in spite of its exclusive ability to handle government loans and issue bank notes, the Bank of England was not a public entity at its founding in 1694. Like a joint-stock company or one of England’s colonies in far-off America, it was subject to a charter issued in the name of the reigning monarch whose terms essentially constituted an extension of the sovereignty of the Crown for the purpose of achieving some desired objective. While the Bank could accordingly claim to have the confidence of His Majesty’s Government – indeed, to possess some portion of that government’s authority in the areas defined by its charter – it remained in a legal sense a private corporation. What this meant in practice was that one of the most powerful and influential institutions in the whole of England – capable of raising vast sums of money in a period of days – was also fundamentally unaccountable to either Parliament or the people. While the government of the day was at least nominally beholden to the general population – and was thus moved to pursue certain policies for the purpose of vindicating and renewing the faith vested in it by the electorate – the shareholders and officers of the Bank were not required to justify their actions to anyone but themselves. They were free to accept or reject government loan requests, thus shaping government conduct and public perception thereof. And they were free, once they had accepted a request for a loan, to set the requisite interest rate at whatever figure they desired. As these interest rates would then directly impact the size of the government’s debt and either necessitate or obviate the need for new or higher taxes, the directors of the Bank thus also possessed the ability to unilaterally increase or decrease the financial burden felt by both the inhabitants of England proper and of its various colonial possessions whose economies had come to depend on access to taxable goods.

  

Having but recently witnessed the overthrow of a monarch – i.e. James II (1633-1701) – whose attachment to the unilateral prerogatives traditionally associated with his station were deemed valid cause for his removal, it was little wonder that men like Trenchard and Gordon and their Commonwealth Party associates would have recoiled at the thought of any entity possessed of such unparalleled power being permitted to operate entirely on its own recognizance. The Glorious Revolution (1688) was supposed to have inaugurated a wholly new era in English political history defined by constitutionalism and the absolute supremacy of Parliament. But if that was truly the case, why was it that in most ways that counted the Bank appeared not to acknowledge the superiority of anyone or anything but itself? Further questions doubtless suggested themselves when the aforementioned critics of the Bank of England took to considering how its presence had begun to affect the way that government functioned and to whom it was truly beholden. If it was possible for anyone with the requisite capital to become a shareholder of the Bank, what was there to stand in the way of the bureaucrats, MPs, and even the ministers whose responsibility it was to define and implement government spending programs attaining said status and then single-mindedly pursuing such measures as validated their investment?

  

Granted, the relationship between the government and the Bank of England need not have been quite so direct for harm to have been done to the public welfare. It might have been that the public servants in question were merely the associates of shareholders, or their allies or relatives. In point of fact, however, such associations were often alarmingly blatant. The first Governor of the Bank of England, for example, one John Houblon (1623-1712), served in that post over the same period of years (1694-1697) that he was also Lord Mayor of the City of London (1695) and one of the Lords Commissioners of the Admiralty (1694-1699). What this meant in practice was that the one of the principle shareholders of the only body then authorized to lend to the government and to issue paper money was also the leader of a municipal corporation dominated by well-connected merchants and one of the authorities responsible for administering an institution which was at that time one of the principle sources of contemporary government spending. As Governor of the Bank, there was nothing to stop Houblon from taking such actions – i.e. advancing credit here, restricting the issue of currency there, etc. – as would benefit his position as Lord Mayor of the City of London. And as a Lord Commissioner of the Admiralty, there was also nothing to stop him from recommending such requisitions – i.e. more ship, more sailors, more guns, more supplies, etc. – as would serve him well as the Governor and a shareholder of the Bank. Provided that Houblon made sure to spread the benefits of his efforts around to enough of his contemporaries in government and at the Bank so as to ensure their continued cooperation, there would not have been much reason for him to fear being held to account for thus using what was ostensibly meant to be an instrument of the public welfare for his own particular ends.

  

That men like Houblon possessed the means to commit such actions without having to make account for themselves was doubtless the principle objection which men like John Trenchard and Thomas Gordon would have been given to voice. The status quo which had emerged following the establishment of the Bank of England at the end of the 17^th century appeared entirely sanguine to the prospect of a strong connection between successive administrations and the leadership of the Bank without any manner of competent oversight. Indeed, as the years followed upon Houblon’s retirement as Governor in 1697, men whose situations closely aligned with his own repeatedly took his place. There was John Ward (1650-1726), Governor between 1701 and 1703 and MP for the pocket borough of Bletchingley from 1701 to 1708; Nathaniel Gould (1661-1728), Governor from 1711 to 1713 and MP from New Shoreham from 1710 to 1728; and John Rudge (1669-1740), Governor from 1713 to 1715 and MP for Evesham from 1708 to 1734. And while none of these men were as exquisitely placed as Houblon had been to exploit their official responsibilities in the name of personal gain, their status as MPs nonetheless gave them a formal voice in the parliamentary budgeting process from whose outcome they stood to benefit as the chief administrator of the sole authorized government lender. Was that now the purpose of government? To allow men of ambition and means to increase the public debt burden while lining their own pockets? To run up a bill for services rendered that they would then enjoy the sole pleasure of collecting?

  

It may once again be taken for granted that the authors of Cato’s Letters – and their allies in the Commonwealth Party – would have answered every question of this like forcefully in the negative. The private enjoyment of the material comforts which the Bank of England’s public dealings afforded – a category which at length included the rise and fall of the South Sea Company – was not the primary purpose which the British government ought to have been serving. The essence of public administration was self-sacrifice, not self-interest; the preservation of virtue, not the promotion of vice. But what was it, really, that Trenchard and Gordon hoped to achieve? Well, in light of the fact that the Bank of England had been incorporated within both of their lifetimes – Gordon when he was but three, Trenchard when he was thirty-two – it would seem as likely as not that they imagined it possible for the Bank to be disassembled and the changes it had thus far wrought to British society to be substantially undone. Thereafter, shod of the corrupting influence of such easy access to capital, British political culture might have been able to resume its proper course as portended by the Glorious Revolution. It was a possible outcome, to be sure, but a likely one? While less than thirty years had indeed passed since the creation of the Bank of England and the emergence of the British “fiscal-military state,” a great deal had transpired in that brief quarter-century. The War of the Spanish Succession (1701-1714) alone had demonstrated the potential benefits of government access to a stable line of credit when coupled to military expansionism and mercantilist economics.

  

Regardless of what actually caused the war between Great Britain and its allies on one side and France and Spain on the other during the first decade of the 18^th century – various complex dynastic and strategic considerations, in essence – the course and significance of the conflict for British economy was relatively straightforward. Loans advanced to the British Government facilitated the expansion and maintenance of the Royal Navy and the British Army, which made possible the seizure of French and Spanish territories in North America, the Caribbean, and the Mediterranean, which gave British merchant firms access to all manner of taxable goods, which in turn facilitated the ability of the British Government to service or retire its aforementioned debts. While the loan obligations taken on by successive administrations would, over time, become quite substantial – a principle cause of both the South Sea Bubble and, at length, the Anglo-American crisis of the 1760s and 1770s – the benefits which Great Britain as a whole had come to enjoy – i.e. access to the lucrative Spanish slave trade, fur trapping territories in North America, strategic outposts at Gibraltar and Menorca, etc. – were similarly substantial. Perhaps, even as late as the 1720s, the British political and mercantile establishments could have been successfully weaned off of their early-onset dependence upon the aforementioned cycle of debt and conquest. Maybe the Bank could have been disassembled, or better regulated, or brought under government control. It may not have been the likeliest outcome, but it may also have been possible. Regardless of whether it was possible or not, however, such a retreat from the course of fiscal-military adventurism that had come to dominate mainstream British political thinking was almost certainly what John Trenchard and Thomas Gordon sought to promote when they penned Cato’s Letters in the early 1720s.

  

There would seem to be little cause to doubt that George Clinton shared is this sentiment. As the cited text of Cato V makes clear, he likewise believed that easy and excessive material wealth would at length herald the moral decay of any society so afflicted. Where Clinton seemed to disagree, however – or at the very least where his intentions were somewhat more explicit – was in his evident conviction that the degeneration wrought by a given society’s increasing love of luxury was more or less inevitable. Granted, he did not say as much in the aforementioned text. Rather than portray the social degeneration wrought by luxury as something that was bound to overtake the United States of America, he wrote in broad terms about human nature and the tendencies he perceived therein. “Opinions and manners are mutable,” he said, “And may not always be a permanent obstruction against the encroachments of government [.]” “The progress of a commercial society begets luxury,” he said. “Americans are like other men in similar situations,” he said. There would seem to be less doom-saying in this language than merely well-founded caution. In spite of the accordingly measured tone to Clinton’s concomitant admonitions, however, he nowhere offered respite to his countrymen or took to explaining how it was he believed they might counter the trends that his various assertions portended. Indeed, his intention – stated fairly explicitly – was not that his fellow Americans should work to turn back the ongoing transformation of their collective character, or that they should take such steps as to erect an impenetrable barrier against the further commercialization of the American economy. Rather, seeming to accept that such transformations would take place – or not – according to their own inscrutable logic, Clinton urged his countrymen to take such steps as to ensure, in the event that the American people someday ceased to be, “Cautious, prudent, and jealous in politics [,]” that the institutions of the American republic were structured in such a way as to resist being warped in service of the worst aspects of the human spirit.

  

No doubt this would have seemed to many of Clinton’s countrymen a rather pessimistic outlook on the prospects that shortly awaited the American people. Having but lately tasted victory in war, and in the midst of enjoying the peace they had won as a result, why should the citizens of the nascent American republic have been at all inclined to doubt their own faculties, or make preparations for the day when their virtues deserted them? Was their recent victory not the direct result of their love of virtue? Was the peace they subsequently enjoyed not precisely what they had fought for? Why should they fear becoming too avaricious for their own collective safety when they wanted nothing more than what they already possessed? Clinton, of course, was merely responding to what he saw. In part, this included the increasing commercial development – and dominance – of his native New York and the effects which he perceived it to be exerting on the political culture therein. But it also very likely included what he knew of the history of early Great Britain as filtered through the perspective of the aforementioned Cato’s Letters. Trenchard and Gordon had been distressed by the effects which the creation of the Bank of England had wrought upon English society and culture as of the early 1720s and endeavored – by warning their countrymen of the ills they were committing – to undo what had thus far been done. Naturally, they did not know whether their efforts would succeed – though one assumes they would not have bothered unless success appeared to be relatively likely. But Clinton did know. Though he obviously shared with the authors of Cato’s Letters a common disdain for the influence of luxury and commerce on public affairs, he also understood better than they did that, once begun, the commercial development of a given society tended not to recede.  

Standing at the other end of the 18^th century from John Trenchard and Thomas Gordon, George Clinton could see where they could not that the efforts of the Commonwealth Party – and other like-minded critics of 18^th century British political culture – had done very little to arrest or even slow the evolution of the British economy towards capital-intensive commerce. The trend towards mercantilism and mixed public/private corporations had begun in the 17^th century, it was true, with the creation of joint-stock companies and trading ventures intended to syphon the resources of distant locales into the British economy. But the aforementioned incorporation of the Bank of England in 1694 touched off a new era of privately-financed military expansionism and publicly-sanctioned financial speculation that transformed the relationship between Britain’s moneyed interests and the traditional political elite. Britain’s participation in the Seven Years War (1754-1763) is very much a case in point. While the ministry of the Duke of Newcastle (1693-1768) was certainly conscious of the anxieties harbored by the inhabitants of British America in the years leading up to the commencement of hostilities that France’s claims in the Ohio Valley threatened their ability to expand westward into the continental interior, the reason for Britain’s eventual participation in the ensuing conflict had far more to do with financial gain than serving the professed needs of its subjects in the colonies.

  

What the governing interests in Britain wanted more than anything in the middle 1750s – more than prestige, more than territory, more than a favorable balance of power – was unquestioned hegemony in the realm of global trade. It was for this reason that Britain was willing to ally itself with the Prussia of Frederick the Great (1712-1786). Unwilling to commit large numbers of troops to a ground war on the European continent – where its financial interests were limited and it stood to gain very little – Britain instead opted to use its proven financial power to subsidize the deployment of an existing ground force – i.e. Frederick’s masterfully organized and trained Prussian army – for the purpose of tying down its rivals while British ships raided their commerce. While France was busy defending itself from Prussian attack in Europe, British forces could accordingly focus their attention on seizing France’s colonial possessions in North America, the Caribbean, and India, all of which represented incredibly lucrative sources of trade-based revenue. Granted, this was all easier said than done. For several years following the outbreak of war in 1754, Britain suffered defeat after defeat at the hands of the French, first in North America and then in the Mediterranean. The Newcastle Ministry subsequently collapsed, and the British political establishment was for a time at a loss for leadership. The formation of a new government involving Whig luminary William Pitt the Elder (1708-1778), however, refocused military efforts on attacking France’s colonial periphery while Britain’s allies in Europe kept up the pressure on France proper.

  

By 1759, Britain had experienced a miraculous reversal of fortunes. The French fortress of Louisbourg – located in what is now Nova Scotia – had fallen to the forces of Field Marshal Jeffery Amherst (1717-1797) in the summer of 1758; General James Wolfe (1727-1759) had taken France’s North American capital at Quebec (albeit at the cost of his life) in September of the following year; and the successful conclusion of the Siege of Madras in February, 1759 had effectively uprooted the French East India Company and set in motion Great Britain’s eventual domination of the Indian Subcontinent. When the dust finally settled four years later with the signing of the Treaty of Paris (1763), the wisdom of Britain’s mercantilist strategy was abundantly proven out. British gains included the vast majority of France’s territory in the northeastern quarter of the American continent – thus permitting British companies to take possession of the lucrative fur trade – and the almost complete exile of French trading interests from India. The debts which the Pitt-Newcastle Ministry had accrued were substantial, to be sure – between funding Prussia’s military and expanding and maintaining the Royal Navy – but the long-term benefits were similarly extensive. Not only did British firms stand to benefit from their unchallenged ability to resell the natural resources of India and Quebec to European consumers whose appetite for animal pelts and exotic spices showed no signs of waning, but the ability of the British government to tax these goods as needed represented a valuable revenue stream whose dividends may at length had exceeded the debts which said government yet owed. The Bank, of course, is what made all of this possible, along with the insurance companies founded on its loans, the trading companies it invested in, and the war-time industries its capital helped to expand.

  

Granted, the United States of America did not possess any institutions that very closely compared to the Bank of England at the time that George Clinton penned Cato V in the penultimate month of 1787. The Bank of North America – discussed in a previous entry in the present series – was most assuredly intended by its architects to perform the same function for Congress as the Bank of England continued to do for Parliament – i.e. provide a centralized source of public credit – but this objective had not been proven out in practice. While, like its British counterpart, the charter of the Bank of North America granted some degree of public authority to a group of private shareholders for the purpose of raising capital that would then be placed at the disposal of the charter-granting entity – an arrangement which, as in Britain, resulted in members of Congress and its various committees buying shares whose value could be made to increase based on decisions that were theirs alone to make – the economic context from which it arose was radically different. There were few manufactories in the United States in the late 18^th century; indeed, few industries of any kind which would have benefited from access to large sources of development capital. Merchants and farmers made purchases on credit, of course, and the needs of the recent war effort had sent all of the various state governments into some degree of debt. But the war had been over for almost five years as of 1787/88, effectively eliminating the urgent need that had supported so much public borrowing between 1775 and 1783. Pursuant to this loss of urgency – or perhaps a cause thereof – the Bank of North America had itself been re-charted as a state bank in Pennsylvania in 1786. Thus lacking either the impetus or the means to replicate the course of economic development previously followed by Great Britain, the nascent American republic – circa 1788 – would accordingly seem to have been safe from falling victim to the worst excesses of the same.

  

Then again, the fact that the United States of America did not appear likely to follow the economic example set by its former colonial master as of the late 1780s was no guarantee that it would never do so at any point in the future. While the American republic was nowhere near as commercially developed as Great Britain during that same period in the late 18^th century, the door was certainly open for the same processes to occur. Yet still eager to replicate the course of economic growth that the incorporation of the Bank of England had inaugurated in Britain, the same people who had devised and sponsored the creation of the Bank of North America – namely Alexander Hamilton and Robert Morris – may well have pursued a second attempt at creating a centralized lending institution for the United States of America. While the urgency lent to their cause by the Revolutionary War had since abated, their remained a number of individuals and interests in the various states – not the least of which was the merchant elite who called New York City their home – who would doubtless have eagerly supported the creation of any institution with the stated purpose of fostering economic growth. Just so, the governments of states like Pennsylvania or Massachusetts – both of which possessed sizable merchant sectors as of the late 1780s – may have taken it upon themselves to create their own lending institutions on the model of the Bank of England for the purpose of managing their respective debts. Given sufficient success in facilitating the growth of the relevant state economies, these prospective institutions may even have sought to expand their operations into neighboring jurisdictions, at length becoming regional sources of public and private capital.

  

Granted, the inhabitants of British North America had never really expressed very much dissatisfaction at the fact that their governments lacked access to the capital readily offered by the Bank of England to the government of their colonial hegemon. And of course the rhetoric of the Revolution had largely tended to prize virtue over vanity; liberty over luxury. That being said – and as Clinton himself had stated – people are rarely (if ever) entirely static in their priorities, convictions, or desires. The 1780s were not the 1770s, the United States of America was entering into an era in its history bound to be shaped by different considerations than that from which it had originally emerged, and the example set by Great Britain as to how and why central banking could be useful was accessible to any and all who cared to partake. It accordingly stood to reason that George Clinton had cause to be concerned. Forced by the circumstances of their newfound independence to reconsider their priorities and convictions as a community now untethered from the British imperial economy, why shouldn’t the citizens of the nascent American republic have sought after proven models of debt management? In light of the abundant growth that the British economy had experienced over the course of the 18^th century, why shouldn’t the Crown’s former subjects in America have sought to replicate some aspect of what the Bank of England had made possible? If the general thrust of Clinton’s cited commentary in the text of Cato V is any indication, he seemed to think that these questions could not be answered in a manner convincing enough to stave off that outcome which he most seemed to disdain. Namely, that the United States would at length become what its most ardent critics in America had long said of Great Britain: corrupt, vain, arbitrary, and sycophantic.

  

Bearing in mind what he perceived to be the evident likelihood of this outcome, Clinton’s prescription was accordingly preventative only in the sense that it sought to stave off the worst aspects of the pending transformation of the American people’s moral character rather than to arrest the transformation itself. “It is a duty you owe likewise to your own reputation,” he counselled accordingly in the third paragraph of Cato V,

For you have a great name to lose; you are characterized as cautious, prudent, jealous in politics; whence is it therefore, that you are about to precipitate yourself into a sea of uncertainty, and adopt a system so vague, and which has discarded so many of your valuable rights.--Is it because you do not believe that an American can be a tyrant? If this be the case you rest on a weak basis [.]

Recalling that the context in which Clinton penned the Cato essays in the final weeks of 1787 was the prospective ratification of a new governing charter for the United States of America, the basis of his objection to the same was consequently rooted in what he thought was likely to become of his countrymen going forward. If the number if states sufficient to trigger the adoption of the proposed constitution successfully voted to ratify the same, Clinton believed it would be on the basis of a faulty assumption that the deficiencies inherent to the resulting national government would be prevented from causing undue harm by the American people’s overriding sense of virtue and justice. As, “Americans are like other men in similar situations,” however, there in fact existed no guarantee that the American people would remain just and virtuous in perpetuity, and that the flaws embedded in the proposed constitution would not at length become a source of injustice and tyranny.

  

For the sake of posterity, then, and for the reputation which the American people rightly cherished, Clinton affirmed that while they yet remained, “Cautious, prudent, [and] jealous in politics [,]” and while they were yet about to enter upon, “A sea of uncertainty,” his countrymen ought to have taken such steps as would ensure that their government would continue to function as it was designed rather than fluctuate between promoting justice and sanctioning iniquity at the whim of whomever had access to the levers of power. To put it another way, the author of Cato V seemed to believe that it was better to erect such restraints there and then while his fellow Americans were inclined to do so rather than depend on future generations to see to the same when they were emphatically disinclined.  Allowing that this made for a somewhat dour recommendation, it was most definitely also a very prudent one that was based not only on the recent history of the Anglo-American world, but upon a clear-eyed understanding of certain fundamental aspects of human nature.