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Robert Morris and the “Art Magick”
Skillful money-juggling by America’s first financier aided the new nation but led Morris himself to utter ruin
October 1956 | Volume 7, Issue 6
No man could rise to such heights without making enemies. All along, Morris had been a vigorous partisan in local Pennsylvania politics. In the enthusiasm of 1776 the Pennsylvanians had ditched their old charter, and installed a constitution which merged most of the powers of government in a single chamber elected by popular vote. Two parties sprang up, a party of western settlers and of the mechanics and artisans in the towns, most of them recent immigrants of Scotch-Irish origin, Presbyterian in religion, who supported the constitution; and a party of merchants. Quakers, and Church of England people who wanted to revise it. The constitutionalists were for printing-press money, price-fixing, legal tender acts, and radical measures against suspected Tories; their opponents, who called themselves Republicans, were for the protection of property, freedom of opinion, and hard money. Robert Morris was a leader of the Republicans.
Since Philadelphia was the seat of the Continental government during these years. Pennsylvania politics had a disproportionate influence on the opinions of members of Congress. The rancor between the two parties in Philadelphia flared into open violence. The constitutionalists threatened to run the Republicans out of(own. and Robert Morris and a group of the “hard money” leaders found themselves besieged in James Wilson’s house. This riot, in which a few men were killed and wounded, proved the beginning of the decline of the “Furious Whigs.” Moderate men began to put their heads together. The Assembly cut off prosecutions by an act of oblivion. It wasn’t long before the Republicans would be carrying the executive council. Robert Morris was elected to the Assembly.
When Congress appointed him superintendent of finance, one of the conditions he laid down was that he be allowed to hold his seat in the Assembly long enough to vote against a new issue of paper money which he considered particularly obnoxious.
Robert Morris set up his office in a building next to the large brick mansion where he lived on Front Street. Immediately he became known as the Financier. He was going to conduct the affairs of the United States as he would his own business. Even before his appointment was confirmed his office filled up with men with long bills demanding to be paid. He was beset by Continental officers with pathetic stories of want asking for advances. Sea captains poured out tales of capture and pillage on the high seas. Butchers, bakers, clothiers, drovers, crowded round his desk trying to turn their dog-eared bills into cash.
The Financier was a businessman who believed in giving his subordinates full responsibility. In the case of his half brother he had made a mistake, and an expensive one. In choosing an assistant superintendent of finance he chose wisely indeed.
He called in a young New Yorker who bore the same name but who came from a very different family background. Gouverneur Morris was the son of the second lord of the manor at Morrisania in Westchester County. There was a brilliant self-assurance about his language in debate that threw elder men off. Some of the delegates spoke of him with dismay as “the tall boy.”
When the two Morrises took over the finances of the Confederacy, inflation had destroyed the value of the paper currency and was fast destroying that of the loan office certificates which were the government bonds of the period. Foreign loans were every day harder to come by. As the war emergency became less acute after Yorktown, it became harder for Congress to raise money from the states.
Paradoxically, at a time when Congress and most of the state governments were in a condition of bankruptcy, the country as a whole was prosperous. Privateering and wartime procurement had brought new wealth into the seaport towns. The rural districts, except where they had actually been laid waste by ravaging armies, were harvesting fine crops. The war had brought more prosperity than it had ruin to the thirteen states.
The problem that faced the Morrises was how to turn the fundamental financial health of the new nation to account. Their first measure was to establish a national bank.
Alexander Hamilton had been agitating for a bank for some time. He pointed out that the blunders and failures in American affairs had resulted not from the disaffection of the people, but from the mismanagement of the Confederacy. When the members of a federation were more powerful than the head, a stable and unified command was impossible. The cure was to enlarge the powers of Congress. Hamilton agreed with the two Morrises that a national bank would be the cornerstone of a stable central government.
Robert Morris went to work to push a charter through Congress. “I mean to render this a principal pillar of American credit,” he wrote Franklin, who was busy in Passy trying to coax a fresh loan out of the foreign office at Versailles, “so as to obtain the money of individuals for the benefit of the Union and thereby bind these individuals more strongly to the general cause by ties of private interest.”
Robert Morris as financier dominated the bank’s operations from behind the scenes. To back up Congress’ credit he had the supreme effrontery to print notes of his own, backed only by the glamour of his name. The Robert Morris notes were generally accepted at a premium over the Continental paper. Never since the days of the Mississippi Bubble had a money man trodden such dangerous heights. To build the edifice of credit he needed on such a very small foundation in actual specie, he had to have recourse more and more to what Washington had called the “art magick.”