Skillful money-juggling by America’s first financier aided the new nation but led Morris himself to utter ruin
Early in the York town year of 1781 the Continental Congress heard the report of a committee which had been at work estimating the debts of the United States. The committee failed to find enough income even to meet interest charges. The Continental paper had reached a point where it cost more to print a bill than it was worth in the market place. Next day the members of Congress voted unanimously to dump the whole mess in the lap of Robert Morris.
The Financier, as he came to be called, was the center of a web of commercial enterprises which included most of the banking and land speculation and shipping of the middle states. He was openhanded, approachable, a bold trader who exuded that prime commercial quality described as confidence. He was thought to be the richest man in America.
Martha Washington’s grandson, George Washington Custis, used to say that of all the Revolutionary leaders it was Robert Morris for whom Washington felt the warmest personal friendship. He was a sanguine, hearty, thick-necked man. He had two town houses and a country house above the Schuylkill, where his table was famous for good food and good drink and cheerful entertaining; he was always ready to crack a friendly pot. He was obliging, particularly to people of influence. He made an opening for one of Washington’s nephews in his country house. He was helpful to the General and to many a member of Congress about discounting notes and cashing bills of exchange. When Jefferson after his wife’s death left his eleven-year-old daughter in Philadelphia for her schooling, Mr. and Mrs. Morris couldn’t have been more considerate. The great magnate arranged loans for congressmen; he gave advice to his many friends about investments; he was everybody’s banker.
Of his appointment as superintendent of finance, Washington wrote: “I have great expectations of the appointment of Mr. Morris, but they are not unreasonable ones; for I do not suppose that by art magick, he can do more than recover us, by degrees, from the labyrinth in which our finance is plunged.” Art magick! High finance was regarded with awe and astonishment in those days, almost as a form of sorcery. What Robert Morris did, in that mysterious realm, no other man in America could have done. The Financier played such a crucial role in the affairs of the Confederacy that, by the time Washington rode home to Mount Vernon in December, 1783, he was left the most influential figure in the government.
Yet there was always ground for suspicion. Joseph Reed of Pennsylvania, who had been Washington’s aide in the old days of the investment of Boston, was a vain and thin-skinned politician but a man of good education and a shrewd observer. After Morris’ appointment as superintendent of finance he described him to Nathanael Greene as a “pecuniary dictator. … It would not be doing justice not to acknowledge that, humiliating as this power is, it has been exercised with much advantage for the immediate relief of our distresses, and that the public have received a real benefit from Mr. Morris’s exertions. At the same time those who know him will also acknowledge that he is too much a man of the world to overlook certain private interests which his command of the paper, and occasional speculations in that currency, will enable him to promote. It seems to have ever been a ruling principle with him to connect the public service with private interest and certainly he has not departed from it at this time of day.”
Part of the confusion over Morris’ honesty as a public servant arose from the complexity of the commercial dealings of the time. Bookkeeping was rudimentary. Since American merchants had to deal with the fluctuating paper currencies of thirteen separate provinces, transactions were basically by barter. Morris would trade so many hogsheads of tobacco estimated in Maryland paper currency, say, for a shipload of molasses in St. Kitts estimated in pounds sterling. In default of other currency, bills of lading would have to pass as a medium of exchange, so that half the time he would be using the bill of lading for the shipload of molasses to meet an obligation for a shipment of straw hats held by a merchant in Leghorn.
Bills of exchange circulated that could be met part in cash, part in commodities, part in credit. Due to the slowness in communications, years might go by before any particular transaction was completed and liquidated. Add to that the hazards of wartime captures and confiscations, and the custom, so as not to have all their eggs in one basket, of a number of shippers sharing in a shipload of goods. “The commonest things,” Morris wrote to a friend, “become intricate when money has anything to do with them.”
Everything depended on the individual merchant’s personal standing in the world-wide commercial community—what Robert Morris, in the parlance of the time, spoke of as his “integrity.” It was considered ethical for a merchant who had in his hands a shipload of lumber consigned to him, say, in Boston, to exchange it, if he saw the chance for a good deal, with the bill of lading for a shipload of hides in Cadiz, without consulting the original owners who might be merchants in St. Eustatius or in Baltimore or in Savannah. In dealing with public funds Robert Morris behaved in the same way. As Joseph Reed pointed out. he was never too curious to find out whether he was using the negotiable paper of the United States for a speculation to his own advantage, or whether he was using his own funds for the benefit of the United States.
He would hardly have been human if he hadn’t encouraged the legend to grow that he was risking his private fortune to finance the Revolution. To a certain extent this may have been true: to a large extent the opposite was true. of one thing we may be sine: the commercial career of Robert Morris was interlocked with the successes and failures of the American cause.
Morris’ appointment as sole superintendent of finance came as the climax of a brilliantly successful business career. It was a career all of his own making.
Born in England in 1734, he was the son of a Liverpool man of a seafaring family who had set himself up as a tobacco factor at Oxford on the Eastern Shore of Maryland. It is doubtful whether his mother and lather were legally married. His grandmother brought him up. When the lather’s business began to flourish he sent for his son to join him in America. Young Robert Morris was then about thirteen.
He arrived in Oxford to find that his lather had set up housekeeping with a lady named Sarah Wise, whom he had never taken the trouble to marry. Young Robert was placed with a merchant friend of the elder Morris’ in Philadelphia to be educated, and in due time was apprenticed in the countinghouse of the Willing family’s notable import and export firm. He served as a supercargo on trading journeys and showed such enterprise and application that he became one of the Willings’ indispensable men.
He was only sixteen when his lather died. Young Robert inherited about £2,500 in Maryland currency. Sarah Wise’s daughter was provided with a hundred pounds and another hundred was left “to the infant with which she was then with child.” When this infant turned out to be a boy whom the mother named Thomas, Robert Morris raised him as his own son.
When the Willing firm was reorganized, some time after young Thomas Willing came hack from London, Morris, although he was only 21, was taken in as a junior partner. He had made good use of his father’s little legacy in private adventures on the Willing ships, and he had already a substantial sum to invest. He and young Willing became firm friends.
Thomas Willing was a cautious, thoughtful individual who in later life was known in Philadelphia as “Old Squaretoes.” His conservatism combined with Morris’ reckless enterprise made the classical combination for a business partnership. The firm of Willing & Morris was successful indeed.
Morris became one of the great men of fast-growing Philadelphia. His easy, convivial manner made him friends in all directions. He married Mary White, a lady from a respected Maryland family who was reputed a great beauty. He acquired a town house on Front Street and a country house across the Schuylkill. This place, The Hills, was known for its fruit and for the products of the vegetable garden and greenhouse. “You see I continue my old practice of mixing business and pleasure,” he wrote one of his friends, “and ever found them useful to each other.”
It was natural that he should push to the fore in the Philadelphia Committee of Merchants during the Stamp Act agitation. He sat in the Pennsylvania Assembly. He was appointed to the Continental Congress. Though he opposed the Declaration of Independence as untimely. when the day came to sign the document he put his name to it in a bold scrawl at the head of the Pennsylvania delegation.
With his practical knowledge of shipping he immediately became the most active member of the Committee of Commerce and of the Marine Committee that handled naval affairs. He saw to it that his firm’s network of correspondents in the West Indies and in European ports became indispensable in the procurement of war materials. He treated the Continental Congress and the state of Pennsylvania as he would commercial partners. While he procured them the munitions they needed he indulged in profitable speculations on his own.
As early as the fall of 1777 Willing and Morris dissolved their main partnership, though they remained associated in a number of enterprises. It is likely that the cautious Willing was already finding Morris’ speculations a little giddy. The failure of young Thomas Morris may have had something to do with Willing’s decision to dissolve the partnership. Robert Morris had given his young half brother “the best education that could be obtained in Philadelphia,” had brought him up in his own countinghouse and had sent him off to Europe to represent Willing & Morris and the United States in a number of delicate negotiations. Thomas took to drink and gambling, fell into the hands of sharpers, and finally died in France in a desperate fit of dissipation. This was not the way Old Squaretoes believed in doing business, ft is possible, too, that Willing was suffering some doubts that winter about the success of the American cause. When Howe occupied Philadelphia he chose to remain in the city as a noncombatant.
Morris, on the other hand, was thoroughly committed to independence. As a merchant, by this time, he was quite able to stand alone. His investments were scattered over the middle and southern states and all of the Atlantic ports. He was involved in nine major partnerships in various American seaports, as well as in numberless smaller enterprises. By the time the fighting ended his fortune was thought to be without equal in America.
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.”
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.
Over the Madeira after dinner his table hummed with talk of vast profits to come. There were profits all right. The Empress of China sailed safely back into New York in 1784 after inaugurating the great China trade. The grand old Alliance , bought from Congress by a syndicate in which Morris took part, was dispatched to the Far East in the opposite direction. Settlers were pouring into the western country. The corner in tobacco lowered the price disastrously for the planters in Maryland and Virginia, but the farmers-general made their advance payments on schedule in His Christian Majesty’s good silver coin. Morris’ difficulty, like that of the Continental Congress, was that his income never could keep up with the vast inflation of his credit. It was only by an extraordinary use of the “art magick” that he staved off bankruptcy as long as he did.
After Washington’s election as President and the formation of a general government on the new plan the Constitution had sketched out, a rumor went around that Robert Morris would be secretary of the treasury, but even Washington, who loved him, felt his affairs were too involved. It would be risking “animadversions” to offer him public office.
L’Enfant’s baroque plans for a new town house for the Financier had put him to ruinous expense and made him a laughingstock. “Morris’s Folly” people called it. He lost a vast block of Georgia land for nonpayment of taxes. He defaulted on payment on 6,000 lots he had bought inside the ten-mile square of the new capital city where he, with a partner, had contracted to build 120 brick houses. The difficult year of 1797, when the failure of the Bank of England extinguished credit for a while throughout the whole Atlantic trading community, put an end to him. “Who in God’s name has all the Money?” he wrote plaintively.
For fifteen years since his resignation as financier, the man whose financial judgment and whose taste in worldly things Washington had always deferred to, had managed somehow to keep in the air, by endless juggling of paper and kiting of promissory notes, an unbelievable structure of interlocking partnerships, land options, loans, mortgages, speculations in everything from ship’s timbers to snuffbottles. Now ingenious men figured that Morris and his last partner John Nicholson were between them in default of something like 34 millions of dollars.
By the fall of 1797 the bailiffs closed in. Morris no longer dared venture on the streets for fear of arrest. There was hardly a man in the country he didn’t owe money to. He retreated to The Hills and there held the process servers and sheriff’s deputies at bay for three months. His spirit never faltered. “Castle Defiance” he called his country house in his desperate notes to Nicholson, who was holding out in similar fashion in what he called “Castle Defense” downtown. “If I ever get square I shall never contract another debt,” Morris confided to his accomplice in dishonor.
While Morris was still holding out in the upper story of The Hills, with the front door barred and a fowling piece in his hand, the estate was knocked down under the auctioneer’s hammer. L’Enfant’s marble folly, Morris’ old downtown mansion, the house where President Washington had lived during his second Administration, the choice building lots, everything went. At last on February 15, 1798, Morris gave himself up and was carted off to the debtors’ section of the Prune Street Jail. There he remained until the passage of a bankruptcy act late in 1801.
When George Washington, as commander in chief of Hamilton’s provisional army during the troubles with the French Directory, visited Philadelphia for the last time he made a point of dining with his old friend. Instead of at The Hills, where the asparagus and strawberries were always so fine in the spring and the apricots and plums in summer and the pears and hothouse grapes in the fall, and where the claret and Madeira and the roast meats were of the rarest, Washington dined with Morris and his wife in a dim, ill-smelling room with barred windows.
When George Washington, erect and stately in his buff and blue uniform with the shining epaulets, strode with a jingle of spurs into the prison room which Mrs. Morris had worked hard to make a little homelike with a few faint evidences of former grandeur, he found both Morrises pale and shrunken after their ordeal of that summer. As soon as he had heard that a fresh epidemic of yellow fever had begun, Washington, who knew they were in financial difficulties but did not realize to what extent, had written to his old friends to come at once to stay with him at Mt. Vernon.
When Washington’s letter reached him the door was already locked on the Financier. His wife, who had taken what Abigail Adams, who called on her there, described as a small neat room nearby, refused to leave him. Together they braved the yellow fever. The streets around were filled with dead. Imprisoned debtors died in the adjoining rooms. They had been spared. They were grateful to God.
Even in this last extremity Morris couldn’t keep his sanguine spirits down. He was already revolving vast new schemes by which he could take advantage of some sudden rise in values to pay off his creditors and spend himself into wealth once more. Though he was eventually to regain his freedom and to live obscurely for a few years after, his great days were over. It was all his good friend Gouverneur Morris could do to salvage a small income for Mrs. Morris out of the wreckage of America’s greatest fortune.
Even in failure and disgrace Robert Morris’ friends thought of him with a certain indulgent affection. Gouverneur Morris and Alexander Hamilton always visited him at Prune Street when they passed through Philadelphia. Thomas Jefferson, no friend of financiers, who had bitterly fought the Morris tobacco monopoly when he was in France as American minister, while he was planning his cabinet with the help of Madison and Gallatin after his election to the presidency, still had enough regard for Morris’ ability and patriotism to consider him for secretary of the navy. The chief obstacle was that no one could imagine any way of getting him out of the Prune Street Jail.