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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
Financing the government became a race with time to meet daily obligations. “It seems as if every Person connected in the Public Service,” Morris wrote in his daybook, “entertains an Opinion that I am full of Money for they are constantly applying even down to the common express Riders and give me infinite interruption so that it is hardly possible to attend to Business of more consequence.”
Year after year the two Morrises kept having to put off their “Business of more consequence.” They did manage to reduce expenses and to put order into the paper work of their department and to list and to certify the heterogeneous congressional debt. They appointed Continental collectors of taxes for the various states, thereby laying the foundation for an internal revenue system.
All their projects failed when Congress forwarded them to the states for ratification, in spite of the fact that they were backed by most of the younger men of the “continentalist” side. Jefferson lobbied in vain for Morris’ impost in Richmond. Even Tom Paine, whom Robert Morris hired at Washington’s suggestion at $800 a year to promote the cause of a Continental tax on imports, failed to make any immediate impression on the public mind. In the end Virginia and Rhode Island between them managed to defeat the tax on imports.
To add to his troubles Morris’ own enormous investments were endangered by the severe depression that the end of the war had induced in the seaport towns. Merchants found themselves overstocked with goods bought in Europe at inflated wartime prices. The carrying trade to the West Indies, which before the war had been the lifeblood of colonial commerce, was choked off by the British through a series of new interpretations of the Navigation Acts in reprisal for American independence. Shipbuilding was at a standstill. Morris’ investments, based on loans against securities borrowed from Peter to pay Paul, had expanded to a dangerous degree.
He held on in the Finance Office even after Gouverneur Morris resigned, in the hope of at least balancing his books before giving up. With the congressional income still insufficient to pay the interest on Congress’ multifarious indebtedness, and with Franklin writing from Passy that he had to have cash to keep up interest payments on the foreign loans, Morris was forced more and more to apply the “art magick” to meet current expenditures. His days were spent dreaming up recourses to bolster the value of the Continental paper, and of his own Robert Morris notes. When credit faltered, men who his critics claimed were his own agents were ostentatiously paid in clinking silver at the Bank of North America.
He carried the art of kiting checks and bills of exchange to a high degree of perfection. The fact that sailing ships took so long to cross the Atlantic made it possible to meet an obligation in Philadelphia with a note drawn on some Dutch banker in Amsterdam. That would give the Financier three months to find negotiable paper with which to appease the Dutchman when he should threaten to protest the note. In the end it was the loan John Adams raised in Holland that extinguished the threat of a protest in Amsterdam which would have ruined Congress’ credit abroad. Robert Morris could now resign with the books of the Finance Office tolerably balanced. He was not so lucky with his procurement transactions. In the final statement of the affairs of the old Congressional Committee of Commerce it was found that Robert Morris still owed the United States $93,312.63.
Robert Morris’ real crime, in the eyes of the men who were trying to keep the states in the ascendant, was his use of public finance to centralize government. As resentment against the impost grew in the state legislatures, Congress filled up with delegates instructed to demand the Financier’s resignation. Morris resigned before the movement against him came to a head. Even his friends had found him highhanded. Hamilton, the most ardent of continentalists, wrote Washington, who he knew held the Financier in high personal esteem, that he felt that the way Morris had tried to bludgeon the members of Congress by holding the threat of his resignation over their heads had been unwise. Still, he added, he had to admit that “no man in this country but himself could have kept the money machine a-going during the period he has been in office.”
Only the Financier knew how desperately his own investments needed shoring up. He kept up the confident front. Men who had dealings with the retired Financier came away awed and excited by the bustle of vast speculations that filled his life. In New York he was loading a vessel with ginseng, that mysterious root, so cheap to gather in America, for which the Chinese mandarins were willing to pay enormous prices. Rumors trickled out of his scheme to corner the entire American tobacco market in a deal with the French farmers-general. He was putting out enormous sums to keep a controlling interest in western land companies. New York State lands were particularly prized. At one point Morris took title to a million and a quarter acres in Genesee country alone.