ReadingThinkingAndWriting

In this time of division in the nation, interesting stories from the nation’s founding can often lend some perspective.  The fact that people of often very different political minds could work closely together to create a nation for the ages often goes unnoticed today.  In the presentation of The Founders and their times in idyllic stories we loose the truth and, what is to me, a valuable insight which can help guide our expectations as well as enhance our oversight of the people we elect to our government. 

For example, how many people know that three delegates refused to sign the Constitution including Edmund Randolph who presented the first draft?  How many people know that the close friendship of Jefferson and Adams was broken by partisan divisions and not restored until the final years of life?

In her book Dearest Friend; A Life of Abigail Adams, Lynne Withey describes Thomas Jefferson and John Adams as an “odd-looking pair” with different backgrounds.  However, they were both passionately fond of books, both preferred a quiet family life, and the two had been “fond of each other ever since they had worked together on the Declaration of Independence”. 

There are many accounts of the very close friendship of not only Adams and Jefferson , but of Jefferson and Adams ‘ family.  In a letter to her sister, Abigail writes that she and Adams dine regularly with Jefferson and that she “shall really regret to leave Mr. Jefferson; he is one of the choice ones on earth”.  Withey writes further that Jefferson “visited weekly if not more often.  He was the only person in France with whom they enjoyed the kind of casual, intimate social life that they were used to at home.”

Adams and Jefferson passed time together in work and out.  They were frequent companions in Europe and Jefferson wrote to Madison that Adams  “”is so amiable, that I pronounce you will love him if you ever become acquainted with him”.  It seems safe to assume that nothing could break a friendship cast in a cause that built a nation through the trials of war and nurtured by familial love.

But that would not be the case, and with their friendship went the nation.  Jefferson and Adams were members of the opposing political parties and were selected by their respective conventions to run opposed.  Because the 12th Amendment hadn’t passed, and possibly due to some “activity” by Hamilton, for the only time in the country’s history the president and vice-president elected were from opposing parties. 

Even so, Adams tried to stay grounded, even writing of Jefferson at the election that he “ever believed in his honour, Integrity, his love of Country and his friends”.  However,  at the very beginning of the Adams-Jefferson administration, the effects of this partisan in-fighting that started under Washington could be seen in the matter forming the first major rift between the two friends; relations with Europe.  In Jefferson’s diary, The Anas, he recorded on March 2, 1797, that Adams wanted him to help in the diplomatic effort with France but didn’t find it justifiable to send away his replacement in case of accident, “nor decent to remove from competition one who was a rival in the public favor.”  But throughout the men retained feelings of friendship.

During the campaign of 1800 additional strains appeared and here the beginnings of deceitful exaggeration can be seen  as the “Democratic-Republican” party of Jefferson was tarred in violence and anarchy, and the members of the “Federalist” party, including Adams, were branded monarchists.  In another eerie parallel to politicking today, both party camps slandered the other in the media with baseless claims and sometimes vicious attacks.  The Democratic-Republican party took aim calling Adams a “bald, toothless, hermaphroditical character”, and the Federalists (republicans today) went with the fear factor claiming that if Jefferson was elected “Murder, robbery, rape, adultery, and incest will be openly taught and practiced, the air will be rent with the cries of the distressed, the soil will be soaked with blood, and the nation black with crimes”.

Despite very different political views and Jefferson’s defeat of Adams in that election, Jefferson wrote to Abigail “I can say with truth that one act of Mr. Adams’s life, and one only, ever gave me a moment’s personal displeasure”.  Continuing “I did consider his last appointments to office as personally unkind.  They were amoung my most ardent political enemies, from whom no faithful cooperation could ever be expected.”  The two friends did not communicate for 10 years following. 

Abigail did not communicate with her friend during that time, with one exception.  The death of Jefferson ‘ daughter, brought forth sympathy and she began writing again letters in which they offered mutual support as Abigail had also lost her eldest daughter Nabby.  But even their shared grief could not keep their disagreements from driving them back apart.  After a flurry of letters, they ceased communication again.

For 10 years Jefferson and Adams ceased writing to each other.  Benjamin Rush, the preeminent physician of the time and signer of the Declaration of Independence tried and failed for two years to bring the estranged friends back together.  It wasn’t until one of Jefferson’s neighbor’s reported hearing Adams speak fondly of him that he decided to renew their friendship.

Jefferson wrote to Benjamin Rush; “But with a man possessing so many other estimable qualities, why should we be dissocialized by mere differences in opinion in politics, in religion, in philosophy, or anything else?  His opinions are as honestly formed as my own.”  The two men renewed their friendship and reveled in it for the rest of their lives.

The end for both men came within hours of each other on the same day; July 4th, 1826, the fiftieth anniversary of the signing of the Declaration of Independence.  From first hand accounts, it is possible that the two men actually fought off death until they reached that day.  Would it have been that the story of their lives and the symbolism of the date of their deaths would serve as a reminder to abstain from the destructive practice of partisan slander, and to act only in the honest debate that might improve the imperfect government they helped form.  The act which might render the Declaration of Independence, as Jefferson wrote of it in his final letter; “the Signal of arousing men to burst the chains, under which monkish ignorance and superstition had persuaded them to bind themselves, and to assume the blessings & security of self-government. that form which we have substituted, restores the free right to the unbounded exercise of reason and freedom of opinion. all eyes are opened, or opening, to the rights of man. the general spread of the light of science has already laid open to every view. the palpable truth, that the mass of mankind has not been born with saddles on their backs, nor a favored few booted and spurred, ready to ride them legitimately, by the grace of god. these are grounds of hope for others. for ourselves, let the annual return of this day forever refresh our recollections of these rights, and an undiminished devotion to them.” (To General Weightman, mayor, Washington D.C.)

I am often struck by the parallels in the issues faced and foresight displayed by the founders as they attempted to build the new system of government and provide guards for the safety and liberty of its people as well as their prosperity. One might be forgiven mistaking the date by a few hundred years when reading about this particular market bubble bursting; in the lead-up and the fallout.

Ron Chernow, Alexander Hamilton’s biographer, defends his subject from charges frequently levied upon him: “He was never a hireling of monied interests; rather, he wanted to attach them to the new country’s interests. Like many thinkers of his day, he thought that property conferred independent judgment on people and hoped that creditors would bring an enlightened, disinterest point of view to government. But what if they succumbed to speculation and disrupted the system they were supposed to stabilize? What if they engaged in destructive short-term behavior instead of being long-term custodians of the nation’s interest? If that happened, it might undermine his whole political program.”

Well, lets see how that turned out… (my primary source is Ron Chernow’s book linked above)

On July 4, 1791, during George Washington’s first term as the new nation’s first president, stock in Hamilton’s Bank of the United States, a kind of precursor to the Federal Reserve, went on sale. Interestingly, the shares where sold in the form of a scrip. As Chernow describes it; an investor would make a down-payment of $25 to receive a contract which entitled them to buy some number of shares at par and then pay off the balance due over the next eighteen months. So the activity centered around the buying of something that wasn’t actually a security… not a direct line to the crash of 2007, but surely an echo.

Some might argue that what happened next should have set off bi-partisan alarms and been the source for productive work by the new Congress. Instead, it just played a part in the bitter partisan divide that was forming in the young nation.

What we would term today, irrational exuberance, took hold as the price doubled and tripled sometimes on the same day. People newly turned speculator rushed in to the cities with carts full of gold in the hopes of getting in on the easy money. Through the following month the price of the scrip would grow to over $300. There was frenzy in the major cities of the north. Chernow quotes Benjamin Rush, John Adams personal physician and major medical mind of his time, as writing “The city of Philadelphia for several days has exhibited the marks of a great gaming house… Never did I see so universal a frenzy. Nothing else was spoken of but scrip in all companies, even by those who were not interested in it.” He then quotes Senator Rufus King as telling Hamilton; “The business was going on in a most alarming manner, mechanics deserting their shops, shopkeepers sending their goods to auction, and not a few of our merchants neglecting the regular and profitable commerce of the city”.

This might sound a bit familiar to those who just experienced the real estate market crash in the United States. But also those who experienced on in Florida in the 1920s. Andrew Bettie writing on Investopedia reports that prices in the Florida real estate market in the 20’s doubled and tripled… “soon everyone in Florida was either a real estate investor or a real estate agent”. This sentiment could be said to apply to the entire U.S. in the years leading up to the recent crash.

During the rise in bank scrip in 1791, Jefferson commented on the impact on the moral character of the nation; Chernow quotes him: “The spirit of gaming, once it has seized a subject, is incurable. The tailor who has made thousands in one day, though he has lost them the next, can never again be content with the slow and moderate earnings of his needle”. Also, Jefferson wrote to Washington, “It remains in a country whose capital is too small to carry its own commerce, to establish manufactures, erect buildings, etc., such sums should have been withdrawn from these useful pursuits to be employed in gambling”.

It seems that Hamilton’s fears of people “engaged in destructive short-term behavior” were realized on the very first event of his building of a market economy in the country. The interesting note here is Hamilton’s foresight, but also his lack of action. Today, the real estate rooted crash which almost took down the world economy was the result of the same “destructive short-term behavior”.

In the end, to this particular chapter anyway, the bubble burst. Just one month after the initial offering. What happened in the aftermath borders on eerie in the parallels to today. The first event, according to Chernow, almost made me drop my ebook reader when I read it; “The bubble was pricked when bankers refused to extend more credit to leading speculators”. In 2008, Bear Stearns and Lehman Brothers essentially collapsed because they ran on credit and banks refused to lend to them. Here are two “leading speculators” which bankers refused to lend to. Further, in September 2008, the Telegraph (UK) reported “A lack of lending in the bank market has led to governments in the US and Europe rescuing five financial institutions in the past two days. Yesterday the US Federal Reserve sought to avoid further banking failures by doubling the amount of dollars available to foreign central banks through swap lines to $620 [billion]”.

Chernow then writes “As a rule, he [Hamilton] tried not to interfere with markets… But he also believed he had an obligation to protect the financial systems”. So he decided to “‘talk down’ the market to avert a worse tumble later on”, and he then proceeded to “buy up $150,000 in government securities”. Although there were further fluctuations, the strategy worked, setting a precedent for market regulation through government action, including the very first bailout.

In another parallel, Jefferson wrote a letter to Edward Rutledge in which he complained “Ships are lying idle in the wharfs buildings are stopped, capitals withdrawn from commerce, manufactures, arts, and agricultures, to be employed in gambling”. Bill Gates, in 2010, gave a lecture to MIT students on the problem of many bright students going into less impactful areas and the financial sectors in the hopes of big earnings rather than into the sciences where they can make positive impacts on human lives.

So why didn’t the founders act?

In 1791, the nation was young and very vulnerable. Fighting between France and England was threatening U.S. commerce on the high seas and possibly the nation itself. Native American attacks, political infighting, and a popular uprising or two were just some of the issues threatening it on land. Still, perhaps they could have acted to stop the cracks before the dam broke.

From the prescient mind of the man who said “If Tyranny and Oppression come to this land, it will be in the guise of fighting a foreign enemy “, we get “The stock-jobbers will become the praetorian head of the Government, at once its tool and its tyrant, bribed by its largesse and overawing it by clamors and combinations.”, from a letter he wrote to Jefferson during in August 1791. Perhaps it was, and still is, the realization of this prediction that was responsible for the lack of meaningful action.

What if Jefferson and Hamilton sat down, put aside their anger, and worked together for the good of the nation as Washington pleaded with them to do in letters sent as the bedlam in the papers was intensifying. What if we all sit down together today as the bedlam in the media is now doing the same?