History That Doesn't Suck - 16: The Founding Fractures: Alexander Hamilton and Thomas Jefferson

Episode Date: May 8, 2018

“I always knew Colonel Hamilton to be a man of superior talents, but never supposed that he had any knowledge of finance.” This is the story of conflict. Infighting. Intrigue. Dissension. This is the story of George Washington’s first term as President of the United States. The new government is making important strides: it’s creating the Bill of Rights and new departments: War, State, and Finance. But Alexander Hamilton’s ambitious plan for the American economy is completely contradictory to Thomas Jefferson’s vision for the country. These two Founding Fathers could not be more different; each also could not be more determined to win at the other’s expense. It’s Alex’s Northern bank-supported commerce versus Tom’s Southern agrarianism. Buckle up. It’s going to be a bumpy ride. ____ Connect with us on HTDSpodcast.com and go deep into episode bibliographies and book recommendations join discussions in our Facebook community get news and discounts from The HTDS Gazette  come see a live show get HTDS merch or become an HTDS premium member for bonus episodes and other perks. Learn more about your ad choices. Visit megaphone.fm/adchoices

Red One... We're coming at you. ...is the movie event of the holiday season. Santa Claus has been kidnapped? You're gonna help us find him. You can't trust this guy. He's on the list. Is that Naughty Lister? Naughty Lister?

Dwayne Johnson. We got snowmen! Chris Evans. I might just go back to the car. Let's save Christmas. I'm not gonna say that. Say it. Alright.

Let's save Christmas. There it is. Only in theaters November 15th. From the creators of the popular science show with millions of YouTube subscribers comes the MinuteEarth podcast. Every episode of the show dives deep into a science question you might not even know you had. But once you hear the answer, you'll want to share it with everyone you know. Why do rivers curve? Why did the T-Rex have such tiny arms? And why do so many more kids need glasses now

than they used to? Spoiler alert, it isn't screen time. Our team of scientists digs into the research and breaks it down into a short, entertaining explanation, jam-packed with science facts and terrible puns. Subscribe to MinuteEarth wherever you like to listen. Welcome to History That Doesn't Suck. I'm your professor, Greg Jackson, and as in the terrible puns. Subscribe to MinuteEarth wherever you like to listen. ad-free episodes, bonus content, and other exclusive perks, I invite you to join the HTDS membership program. Sign up for a seven-day free trial today at htdspodcast.com slash membership, or click the link in the episode notes. Welcome to History That Doesn't Suck. I'm your professor, Greg Jackson, and I'd like to tell you a story. The explosion of artillery at New York's Fort George welcomes the sunrise with a military salute.

Today, April 30th, 1789, is the day that George Washington becomes the first ever to swear an oath to uphold the U.S. Constitution as President of the United States. Truly, given his role as the Continental Army's Commander-in-Chief, as the Virginian who led Americans hailing from all over the colonies to military victory and independence, having a military salute signal the beginning of a new day and the executive branch's debut could not be more appropriate. The day is chock full of celebration. At 9am, church bells ring out across New York City for a full half hour. But we don't need to listen to that for 30 minutes. You get the point.

Meanwhile, George has been up since early this morning preparing for the big day at his New York residence. Ever the resplendent dresser, George is bringing his A-game with his brown suit and powdered hair. Of special note, that suit's American. And that's quite a feat. It's hard to find material woven in non-industrialized, nearly exclusively agricultural America. But he did it. The now civilian president-elect wears but one thing that nods to his warrior ways this morning. The ceremonial sword hanging from his side. Come 1230 that afternoon, George gets in a yellow carriage pulled by six white horses, Cinderella would be jealous, and sets off with quite the entourage. This includes members of Congress, New York Chancellor Robert Livingston,

as well as two foreign dignitaries, ministers from France and Spain. But the parade is far bigger than George's immediate crew. In all its glory, the procession also has Colonel Morgan Lewis serving as the Grand Marshal, and a whole slew of military, including a 500-man militia, artillery, grenadiers, and some Scottish Highlanders. Beyond that, regular citizens follow as well. As you can see, this is no small to-do. At one o'clock, Vice President John Adams and the rest of Congress welcome George to Federal Hall. Though it'll later get torn down, Federal Hall is a gorgeous red brick structure with two long rectangular windows on each side of its four massive two-story columns.

At 2 o'clock, George steps out onto Federal Hall's second-story balcony overlooking Wall Street. Some 10,000 New Yorkers have packed themselves into the crowded city streets with hopes of witnessing this historic oath. Can you imagine the ruckus of the cheering crowd? It's here, on this red and white curtain-adorned balcony, and in full sight of the American people, that George takes the oath of office. John Adams and possibly some congressmen stand by his side. George places his right hand on the Bible, provided by the local Masonic Lodge, which is opened randomly to Genesis 49 and 50. As a Mason himself, I'm sure George appreciates the local lodge's contribution.

New York Chancellor Livingston now administers the oath found in Article 2, Section 1.8 of the U.S. Constitution to George. As it reads, Upon completing this sacrament of the Republic, our brown-suited, sword-clad president leans down and kisses the Bible. Legend claims he also said, So help me God. But like the cherry tree, this story is likely a fabrication of the 19th century. It is done.

Long live George Washington, President of the United States. Chancellor Livingston calls out so everyone knows the soft-spoken, barely audible George has finished the oath. Church bells ring once again gives the first inaugural address. George being George, some of his words are self-effacing and, being a deist,'s obvious to Congress and the few other invited guests present that this leader of men who's charged straight into enemy fire is quite nervous. Why, I wonder? My best guess is the pressure he feels about this republic succeeding. In his speech, George says, and I quote, the preservation of the sacred fire of liberty and the destiny of the Republican model of government are justly considered as deeply, perhaps as finally staked,

on the experiment entrusted to the hands of the American people. Well, that's a heavy thought. George is atlas. The fate of representative government rests on his aging, rounding, arthritic shoulders as monarchies around the world pray for his failure. Perhaps the presidency is scarier than charging into battle. And on that auspicious note, welcome to the presidency of George Washington. As you can see from this speech, he's feeling the weight of his first term in office, and there is much to do.

During this episode alone, we still need to ratify the Constitution, create a Bill of Rights, organize a presidential cabinet, move the U.S. Capitol, and try to get the young nation's finances, which are faltering, back on track. The brilliant new Secretary of the Treasury, Alexander Hamilton, has a plan for that, but it's going to put him at odds with two other powerful founding fathers, Thomas Jefferson and James Madison. By the end of George's first term as president, their fracturing relationship will give way to infighting that makes cage fighting look like a walk in the park and lay the foundation for America's first political parties. Good times, right? Okay then, let's get into George's first term by heading back to 1787 and figuring out how this constitution is getting ratified. You know the drill. Rewind.

Here we are, back at the end of the sweaty, sweltering Philadelphia summer of 1787, where the Constitutional Convention has just come to a close. We learned about this in episode 15, remember? Well, within days of the September 17th signing, the Convention's delegates send the proposed Constitution to the Continental Congress in New York. And, in uncharacteristic style, Congress moves quickly. It approves the U.S. Constitution and sends it to the states for ratification before the end of the month. Three states ratify in December. Delaware's first, letting Delawareans forevermore brag with their slogan, the first state, on their car's license plates.

Next comes Pennsylvania. Not that the Constitution doesn't have its haters, which are known as anti-federalists, and remember that. But with the support of the legendary Ben Franklin, who's also currently the president of the state's Supreme Executive Council, things move quickly with a vote of 43 in favor of ratification and 23 against. Then New Jersey follows. Like Delaware, it's wooed by equal state representation in the Senate and ratifies unanimously.

In January 1788, Georgia ratifies unanimously too. Sharing a border with Spain and American Indians, the Peach State is stoked to join a strong union that might offer it protection. Small state Connecticut also hops on board by the end of the month. Connecticutters love how the Constitution hems in New York's and Massachusetts port taxes on goods destined for their state, so they ratify 128 to 40. But after these five states, ratification gets bogged down. Massachusetts' previous Constitutional Convention delegate, the now anti-federalist Elbridge Gerry, loses his temper at the state's ratifying convention. A full-on fistfight breaks out. Just think of that the next time you want to romanticize

the politics of yesteryear as being more highbrow than what we do today. The Federalists swing things in their favor by winning over two local boys we haven't heard from since the early episodes. The wealthy, good-looking, ambitious, and now current governor of Massachusetts, John Hancock, and the likely tea party-throwing radical founding father we now mostly associate with beer, Sam Adams. They seduce John partly with talk of putting his name forward for vice president. Sam gets pressure from his friends. The real kicker, though, is talk of amendments. John and Sam say they support the constitution but add that they want to see amended immediately. Come February 1788, the Bay State ratifies by a narrow majority, 187 for and 168 against. Maryland defeats the high-functioning alcoholic anti-federalist

Luther Martin and pushes through ratification in April with 63 votes in favor to 11 against. Meanwhile, South Carolina, which scored a lot of protection for slavery during the Constitutional Convention, ratifies in May, 149 in favor to 73 against. And in both of these states, we have more suggested amendments. Then things get really heated in Virginia. Not only are there some well-respected anti-federalists here, like Patrick Henry, who fights tooth and nail against the Constitution during the 22-day ratifying convention, but with eight states having ratified, one more ratification will bring the proposed U.S. federal government to life. Virginia ratifies by a narrow 89 to 79.

But in doing so, they too note that they want some serious amendments. In fact, the anti-federalists here suggest 40. And thus, Virginia becomes the 10th to ratify. Yes, 10th, because unbeknownst to the Virginians, fiercely independent New Hampshire secured the role of being the crucial 9th state by ratifying on June 21st. Virginia follows New Hampshire four days later. New York's another tough win. There's even an unsubstantiated story that Federalist leaders Alexander Hamilton and John Jay started planning to lead a New York City secession movement from the rest of the state if the Anti-Federalist reps shot the Constitution down.

Thankfully, it doesn't come to that. Despite kicking around an astounding 55 amendments, news of Virginia's ratification undermines the Anti-Federalists' efforts here. After all, were they really ready to stand outside this union of states when New York could be a leader within it? In July 1788, New York ratifies it by a truly thin margin, 30 to 27. But before we move on, let's note that the Empire State's ratification process also inspired the ever-opinionated Alexander to team up with Virginia's James Madison and fellow New Yorker John Jay to write newspaper articles in support of the Constitution. Together, there are 85 essays, 5 by John, 29 by James, and an astonishing 51 by Alex, are the Federalist Papers. They published them under the pseudonym Puplius in New York newspapers

between October 1787 and May 1788. The fascinating thing is that, while they are written as pro-Constitution propaganda intended to sway undecided voters, and while they likely had little, if Island and North Carolina, but we have a ratified constitution. It officially takes effect on March 4th, 1789, and it's about this time that the sage men chosen to select the President of the United States of America through the Electoral College unanimously elect George Washington. And that just about brings us back to where we met George today. He arrives in New York City roughly a week before his swearing in and moves his massive household, which includes his wife Martha, her two grandchildren, one secretary, 14 white servants, and six black slaves into a place on the corner of Cherry and Dover streets. Nothing more than a plaque will note the no longer existing mansion in the 21st century, but right now it's a beautiful three-story brick colonial with modern furniture, fresh new carpets, seven fireplaces, and an enlarged drawing room ready

to accommodate presidential entertaining. And let's get personal with George for a second by noting his role as entertainer. He has a constant stream of houseguests, callers, and looky-loos, all wanting a minute of the president's time and a peek at the presidential house. Well, something's got to give. As a Republican head of state, he wants to be accessible, unlike a monarch. But poor George can't get anything done like this. So he discusses the dilemma with a number of people. These include John Adams and Alexander Hamilton, which probably isn't the best

idea if you're looking for a Republican, not-at-all monarchical way forward, since these two are known for being elitists. I mean, there's a reason some like to mock the somewhat overweight vice president from Braintree, Massachusetts, by calling him his rotundity and the Duke of Braintree behind his back. Anyhow, George decides to hold a levée every Tuesday from 3 to 4 p.m. So it cuts his visitors down to a one-hour window, but he's still accessible because any respectable gentleman may attend. The formality of the levées make them really boring and stiff, bringing quite a bit of criticism from people like Thomas Jefferson, who think they stink of monarchy. And can I just point out, if you're trying to not come off as elitist, maybe don't use a French word for the weekly get-together. I mean, really,

lever? Call it George's man cave hour and have him at the grill with an apron that reads America's favorite commander in chef. Oh well, that's what happens when Alex and John weigh in on your get-togethers, I guess. George also hosts weekly official dinners for important government figures. You know, members of Congress, diplomats, that crowd. He rotates through who's invited so none of the politicians get bent out of shape. These are actually more fun than the levée, partly because George has good friends and old war buddies in government whom he enjoys seeing. But don't get the idea that these are a blast either.

Thankfully, Martha's at these dinners, and being as well-read, well-bred, and affable as she is, the First Lady carries the conversation. And let's just take a moment to thank the almighty author of the universe for Martha. In addition to making Georgia's weekly state dinners not entirely suck, she hosts her own weekly tea party every Friday evening. Men and women are invited. All you have to do is show up formally attired. And these tea parties are off the hook. People actually enjoy themselves. George regularly attends and is way more comfortable here than at his

levee. He smiles, he chats, he even cracks the occasional joke. And brilliantly, the first lady also sits next to the second lady, Abigail Adams, at these tea parties. See, their husbands don't really get along. As smart as John Adams is, the New Englander curmudgeon isn't the best at making friends, and he and George have a history, not all of which is positive. So the bond between Martha and Abigail really is a service to the nation. Martha is a peacemaker who keeps friendships alive among the opinionated men serving in George's administration. As she bonds with their wives, such as Lucy Knox, Eliza Hamilton, and Sarah Jay. Too bad Thomas Jefferson is a widower and James Madison is still a bachelor. In case you're not following, that's called foreshadowing.

Okay, so now that we've peeked into the Washington's private life, what's going on in Congress? They're crushing it. They pass bills to pay the president and the department secretaries. They also create three new departments, foreign affairs, aka state, war, and last but not least, treasury. Kind of hard for any future Congress to say they did better, you know? I mean, when you pass a bill to name a post office after some famous person, do you really feel as accomplished as the people who invented the department of the Treasury? That said, there's still plenty of drama in the first session of Congress. On June 8, 1789, James Madison presents his ideas for amending the Constitution to the House.

Remember how several of the 11 states in the Union thus far made clear that they wanted amendments with New York's anti-federalists, even suggesting 55 of them? Well, this short, balding Virginian means to attend to these demands. He stands before the House and says he considers himself, quote, bound in honor and in duty to bring the amendments before you as soon as possible, close quote. James has spent the last few months studying the recommendations from the state ratifying conventions, especially those of New York and Virginia, and whittled them down to nine umbrella statements of 19 amendments, which he presents to the House. Now, James did oppose a Bill of Rights at the Constitutional Convention, but the ratification debates changed his views.

Besides that, his home state of Virginia ratified the Constitution with a formal list of recommended amendments. James then ran for Congress on the promise of introducing and fighting for amendments to protect the liberties of the people of Virginia and the United States. So it's time to make good on those promises. Immediately, James meets opposition. Many congressmen don't think amendments are necessary or even a good idea. George's James Jackson argues that the Constitution hasn't even been tested yet. Why amend something that's

untried? Connecticut's Roger Sherman says they have more pressing matters, like funding the government and paying debts. And so, the amendments get put off. But the next month, on July 21st, James, in defiance of his timid reputation and nickname of Little Jemmy, puts forward his amendments once again. When Johann Rall received the letter on Christmas Day 1776, he put it away to read later. Maybe he thought it was a season's greeting and wanted to save it for the fireside. But what it actually was, was a warning, delivered to the Hessian colonel, letting him know that General George Washington was crossing the Delaware and would soon attack his forces. The next day, when R Raw lost the Battle of Trenton and died from two colonial Boxing Day musket balls,

the letter was found, unopened in his vest pocket. As someone with 15,000 unread emails in his inbox, I feel like there's a lesson there. Oh well, this is The Constant, a history of getting things wrong. I'm Mark Chrysler. Every episode, we look at the bad ideas, mistakes, and accidents that misshaped our world.

Find us at ConstantPodcast.com or wherever you get your podcasts. Want to learn how you can make smarter decisions with your money? Well, I've got the podcast for you. I'm Sean Piles, and I host NerdWallet's Smart Money Podcast. On our show, we help listeners like you make the most of your finances. I sit down with NerdWallet's team of nerds, personal finance experts in credit cards, banking, investing, and more. We answer your real-world money questions and break down the latest personal finance news.

The nerds will give you the clarity you need by cutting through the clutter and misinformation in today's world of personal finance. We don't promote get-rich-quick schemes or hype unrealistic side hustles. Instead, we offer practical knowledge that you can apply in your everyday life. You'll learn about strategies to help you build your wealth, invest wisely, shop for financial products, and plan for major life events. And you'll walk away with the confidence you need to ensure that your money is always working as hard as you are. When the same arguments arise, James is ready to rebuff them. He gets his amendments to a selection committee with one representative per state, including himself repping Virginia. The committee wrestles James' 19 amendments into 12 succinct amendments. When they present their work to the House on August 12th, fierce debate ensues. In fact, South Carolina's William Smith says, quote,

there has been more ill humor and rudeness displayed today than has existed since the meeting of Congress. And to make matters worse, the weather is intensely hot. Close quote. Well, suck it up, William. If you've been in Philly during the summer of 87, you'd know Americans only talk constitutional topics when it's hot. And for two long weeks, Congress debates the content, wording, and placement of these 12 amendments. Finally, come August 24th, 1789, the House sends them to the Senate, which in turn sends them to the state legislators with only a few minor changes.

Side note, now that the Bill of Rights is finally happening, North Carolina and Rhode Island will finally ratify the Constitution. It still takes over a year, but in December 1791, the necessary 11 states ratify 10 of the 12 amendments. And these ratified 10 amendments are the Bill of Rights that we know and love, or love to argue about, today. Now, why do early Americans choose to explicitly protect these rights? They are a combination of long-standing Anglo-American political traditions and responses to the specific ways in which the British abused Americans during the 1760s and 70s. The First Amendment protects freedom of religion, speech, and the press. Since the amendment only

specifies that, quote, Congress shall make no law respecting an establishment of religion, close quote, several state-funded churches and state-level religious requirements to hold office will continue for a few decades. The Second and Third Amendments are what happens when your congressmen still have bad memories and recurring nightmares of their last government trying to seize the militia's munitions and force the people to quarter soldiers. If that doesn't ring a bell, go re-listen to Episodes 5 and 6. Amendments 4 through 8 make clear the rights citizens have if arrested, such as protection from unreasonable search and seizures. If you remember how John Hancock's ship got seized in Episode 3,

this shouldn't surprise you at all. 9 and 10 dot the I's and cross the T's. They note that these stated rights do not necessarily mean there aren't other rights and that any powers not specifically assigned to the federal government rest with the state governments. And with their passage, James Madison has achieved a true rarity. He's a politician who delivers on promises. You might be wondering what George is up to during all this talk of Bill of Rights. Well, he's staying out of it. First, he's keenly

aware of the principle of separation of powers and respects the legislature's domain. But besides that, he's in no condition to govern. George is fighting for his life. In June 1789, George develops a large carbuncle, which is an infected abscess, in his left thigh and an accompanying high fever. A worried Martha calls for doctors. A father and son medical team examine George and conclude that the president is infected with anthrax. Now don't panic. Anthrax infections are fairly common among farmers in these days. But this does mean surgically removing the growth. And it's a grueling operation. Cut away.

Deeper. Deeper still. Don't be afraid. You see how well he bears it. Urges on the father, almost sadistically, like he's enjoying this power over the American president. In these days before anesthesia,

George fully feels each cut and slice of the young doctor's scalpel as it severs his flesh. The son's aggressive attack on the abscess proves successful, but the recovery is long. George doesn't get out of bed and back to business for several weeks. Officials string rope across Cherry Street to block traffic and spread straw on the sidewalk near the house to deaden the noise of carts and passersby, all with the hope of making the president's recovery a bit more tolerable. Poor George. This illness struck him down as he was picking advisors during the summer of 1789.

But now he's getting back to it. These are big decisions. As George says in a letter to his friend, Catherine Graham, He's right. Whom he includes and whom he leaves out will set the tone for every U.S. president that follows. For one thing, he chooses to leave Vice President John Adams out in the cold to not bring him in as an advisor. We already touched on the importance of Martha and Abigail's friendship

because these two don't get on. You need to remember that at this point in U.S. history, the president and VP don't run together on a ticket. So you can end up with two guys who aren't buds. And you know, in an alternate world where George might have liked his vice president, the office could have grown into an important prime minister sort of role. Instead, it becomes less vital. In fact, John will later complain to his dear wife, Abigail, that the office of vice president is, and I quote, the most insignificant office that ever the invention of man contrived. Close quote.

I'd say it's evolved to have some importance today, but by and large, precedent set, VP will never have the importance it could have. So whom does Georgia point in positions of influence? That is, in the presidential cabinet. That's not a term yet, by the way, but it's such a useful description, we'll just run with it. We have some familiar names. First, George keeps the bookish Bostonian and king of cannons, Henry Knox, as secretary of war. As for the small, part-time task of attorney general, he appoints his buddy, the fellow Virginian who introduced the Virginia Plan, then didn't sign the Constitution, then supported the Constitution at the ratifying convention, Edmund Randolph. Seriously, indecisive much?

George asks the lanky, negotiating New York lawyer, John Jay, to be Secretary of State, but he responds that he'd prefer to be Chief Justice of the new Supreme Court. George is good with that, but now who will run state? His second choice is Thomas Jefferson. I was naturally led to contemplate the talents and dispositions which I knew you two possess. I was determined to nominate you for Department of State. George writes to Thomas. Just returned from serving as foreign minister to France, Tom doesn't reply to George immediately. He'll fill the role, but he won't show up until next year, in March 1790. By the way, Tom's delay leaves George to hammer out the first treaty

the United States makes with the Creek Nation in August 1789. The Constitution only gives a few broadly worded instructions about how the Senate and the President should work together to make treaties, leaving George a lot of room to invent how this works. Ever the collaborator, George goes to the Senate chamber. The Senators live up to every stereotype you can think of regarding Congress. Lots of talk with little accomplished. Finally, George gives up. As he barges out of the Senate chambers, he's heard muttering, to quote George, I'll be damned if I ever go there again. Close quote. And with that, George sets yet another presidential precedent.

No other president will ever go to the Senate to be advised on a treaty. Treaties are strictly the president's domain. The Senate only approves a resolution of ratification. But back to setting up that cabinet. George offers the crucial position of Treasury Secretary to the informal financier of the revolution, Philadelphia's Robert Morris. Robert turns him down. Ironically, he's headed for bankruptcy. But he points George in another direction. According to one account of their conversation, Robert replies, This takes George by surprise. I always knew Colonel Hamilton to be a man of superior talents,

but never supposed that he had any knowledge of finance. George answers, he knows everything, sir. To a mind like his, nothing comes amiss. Robert responds, now how he and Alex never talked finances during the war is beyond me. It seems they really didn't. But now so informed, George calls once again upon the talents of the Caribbean-born swashbuckling wielder of words and financial genius, Alexander Hamilton. For the last seven years, Alexander has been practicing law in New York. He and his wife Eliza have four small children, and in his spare time, he instigates constitutional conventions, writes over 50 essays in defense of the Constitution, and studies economic theory.

All in a day's work, right? Yeah, if Alex lived in the 21st century, I don't think he'd have time for Netflix. With his exceptional intellect and endless energy, Alexander has the U.S. Treasury Department moving forward almost immediately after his September 1789 appointment. He gets loans from two banks so that the government has ready cash, and when Congress asks him to prepare a report on government debt by January, Alex cranks out his 51-page report on public credit. This is far more than a rundown on the government's current economic position. Pulling from a variety of European and American scholars, theorists, and experts, Alex has created a detailed plan to pay America's combined $79 million debt, build its credit, and create a desperately needed currency.

I'll break this down into two major points. One, the federal government issues bonds, and two, the federal government assumes state debts. Point one, bonds. If you're unfamiliar with bonds, these are certificates sold by a company or a government basically selling a part of its debt to the buyer, which we typically call an investor. So after the federal government sells these interest-bearing bonds, Alex wants to set aside a portion of the revenue regularly to make interest payments on the government's crushing debts. Meanwhile, the government guarantees full repayment of its bonds,

and this is really important, while it only buys back 2% of these bonds per year. This will in turn make the bonds a sort of permanent fixture in the economy, and that matters because it will quell speculation and wild fluctuations in the market and make the bonds a type of currency. Point two. So I told you America has a total debt of $79 million. That breaks down into a national debt of $54 million a total debt of $79 million. That breaks down into a national debt of $54 million and state debts of $25 million. These are the debts Alexander wants

to use the bonds to pay off. And yes, he wants the federal government to absorb, or assume, the state's debts. There's a few reasons for this. Practically speaking, assumption will make payment more efficient. Politically, Alexander wants to shift Americans' loyalty from their home states to America. And how do you get the rich to do that? Get their money involved in it. If the federal government owes the wealthy money, they'll be invested in the government's success. This will also keep the states from competing with the federal government for tax revenue. As for the fairness of it all,

Alex will also point out that all Americans equally enjoy the fruits of the war, but the debt caused by the war was not equal. Doesn't debt-ridden Massachusetts and New York, where much of the occupation and fighting happened, deserve help then? If you didn't follow all of that, here's all you really need to know. Alexander is a financial wizard who has a plan to consolidate America's debt and pay it off with government bonds to make everything better. And if you didn't follow it, well, don't worry, you're not alone. When Alexander's plan is read to Congress, its members' brains start to short-circuit as they utterly fail to understand the Caribbean-born lawyer's brilliance. First, many in Congress think Alexander's plan means permanent debt. Hell, some people still

think that today. Alexander says he, and I quote, ardently wishes to see it incorporated as a fundamental maxim in the system of public credit of the United States that the creation of debt should always be accompanied with the means of extinguishment. Close quote. And he plans to extinguish the current debt with the revenue from the postal system and the 5% federal duty on imports that were passed the ancient world. Sometimes we do it tipsy. Sometimes we have amazing guests on our show. Historians like Barry Strauss, podcasters like Liv Albert, Mike Duncan, and authors like Joanne Harris and Ben Aronovich.

We take you to the top of Hadrian's Wall to watch the Roman Empire fall at the end of the world. We walk the catacombs beneath the temple of the Feathered Serpent under Teotihuacan. We walk the sacred spirals of the Nazca Lines in search of ancient secrets. And we explore mythology from ancient cultures around the world. Come find us at ancienthistoryfangirl.com or wherever you get your podcasts.

It's also obvious that Alexander's plan borrows heavily from the British financial system. He owns that fact. Alex is simply trying to enable America to beat Britain at its own economic game. It's as Pablo Picasso probably didn't say, quote, good artists copy, great artists steal. Close, probably incorrect quote. Alex wants to steal. But many congressmen don't get this and worry that Alex is trying to make America subservient to Britain. Okay, so those are the big picture misunderstandings. Others have

problems with the specifics. This is where the relationship between Alexander and his old constitution-making buddy, James Madison, start to fracture. James hates the idea of the government's debts, much of which exists in IOUs written during or after the war, being paid in full to whomever currently holds them. This is because many of those holding these IOUs are speculators who bought them for pennies on the dollar from patriots and soldiers who needed fast cash around the end of the war. We saw this at the end of episode 14, remember? Watching speculators pocket a windfall while veterans get nothing sickens James. During the February 1790 debates on the financial plan, James says,

there must be something wrong, radically and morally and politically wrong, in a system that transfers the reward from those who paid the most valuable of all considerations to those who scarcely paid any consideration at all. To fix this, James suggests discrimination. That doesn't mean what you think. By discrimination, James means the original IOU holders, like the Continental Soldiers, will still get some of the payment at the speculator's expense. It's a great idea, but impossible to execute. So it gets defeated. And as this debate rages, Alex feels completely blindsided by his once federalist papers collaborator. This is the beginning of the end of their friendship.

Regional fractures are spreading across Congress too, because James isn't the only southern opponent of Alexander's financial policies. See, the North and the South have distinct economies that are only becoming more different every day. For now, just keep in mind that the North, while still mostly agrarian, is more urban than the South, which is super agrarian. Like, almost exclusively. So with these distinctions, Southern congressmen believe

that many of the speculators who bought government securities were Northerners who swindled unsuspecting Patriot Southerners. It's not true, but they believe it and they don't trust Alex's plan. But it's federal assumption of state debts that faces the greatest opposition. See, states that have already paid their debts, like Virginia, think assumption is unfair since their tax dollars would essentially go towards paying off another state's debt, like that of indebted Massachusetts or New York. And like James' discrimination idea, it's becoming a North-South issue. After the initial vote in April 1790, it looks like Assumption isn't going to make it through the House. Alexander is freaking out.

As he puts it, quote, credit is an entire thing. Wound one limb and the whole tree shrinks and decays. He's got to find a way to get assumption through Congress. He needs leverage to win over these Southerners. And he finds something. The United States' permanent capital. Way back at the Constitutional Convention, the delegates decided to create a federal district for the new nation's capital in a location to be determined.

Currently, New York, Philadelphia, and somewhere along the Potomac River are contenders. Southerners want the capital to move south, so to the Potomac, because they fear a northern capital will favor urban and mercantile interests at the expense of their agrarian ways. Alexander is pro-New York, no surprise there, but he's willing to deal. It's time to bring Thomas Jefferson back into the story. According to the late-to-the-game Virginian and Secretary of State, he finds a haggard and dejected Alexander leaving the president's home one calm summer evening in 1790. Our beleaguered treasurer paces back and forth, talking for nearly half an hour about his fear that the Assumption Bill is almost surely dead,

and how that could lead to Northern states' secession and kill the Union. Alexander begs Thomas to use his influence with the Virginian congressmen to move the Assumption Bill forward. Ever the capable politician, Thomas suggests he could host a dinner party to bring Alexander and James Madison to the table, literally, and see if they can't come to some kind of arrangement. So Thomas invites Alexander, James, and a few other senators to dine at his New York home on Maiden Lane. This dinner that will forever change America happens on June 20th. Now the details are non-existent here, because that's how secretive behind-closed-doors deals work.

But knowing Tom, there's probably eight varieties of wine being served. That's his usual thing, and given that he brought 288 bottles back from France last year, I'll bet his guests are imbibing a bit of it. Perhaps a Pinot Noir from Burgundy. But then again, Tom would know his fellow Americans don't have his French tastes, so I'm sure the well-mannered southerner has some madera on hand too. The meal itself is undoubtedly scrumptious. I'll guess it's a French cuisine. After all, what was the point in having his slave James Hemmings train as a chef in France if not to prepare for such delectable dishes here?

And Mr. Hemmings is with Tom in New York, so I'm sure he's cooking this evening. Perhaps a beautiful woman with long, dark hair moves between the kitchen and the dining room as she serves the guests. If so, that's Sally. But we don't know for sure. Amid the undoubtedly witty banter and flowing wine, Alexander and James Madison finalize an agreement likely well in the works before tonight. Alex will get his assumption bill, and the South will get the nation's capital. Today we call this city Washington, D.C. James and Alexander stay true to their word. Within a few weeks, the Resident Act passes, making Philadelphia the temporary capital while a permanent site is built on the Potomac River. Then, on July 26th, the House narrowly passes the Assumption Bill. James Madison doesn't vote for it, but he makes sure four other

congressmen from Virginia and Maryland do. Wow, how House of C cards is that? Joking aside, Alex, James, or Little Jimmy, gotta love that nickname, and Tom just made some important compromises to move the country forward. George Washington is proud of them, as he should be. It really is a shame they're going to split into two camps, Alex versus Tom and Little Jimmy, and savagely try to destroy each other. See, despite this deal, Alexander and Thomas are coming to hate each other, to loathe each other. It's almost like the supreme architect made them to fight. They only have two things in common. One, both men are alphas who can't stand being wrong. And two, both see George Washington as a replacement father that they aren't willing to share with the other.

So even where they do have commonalities, they're in competition. Otherwise, they are as different as night and day. Alexander sees things linearly. Thomas is a circuitous philosopher. Alex is a doer. Tom is aous philosopher. Alex is a doer. Tom is a dreamer. Alex is a war hero. Tom didn't fight. Alex is an immigrant and northerner. Tom's an old blood southerner. Alex dresses sharp. Tom can be so sloppy even his fans think he should dial back the absent-minded professor look. The good thing is their differences have enabled them to do very different but important things for America.

Tom's philosophical mind gave us the lofty ideals of the Declaration of Independence, while Alexander's logical mind produced most of the Federalist Papers and is now trying to fix the economy. But they can't even grasp each other's worlds as they conjure up mutually exclusive visions of America's future. Alexander foresees a strong federal government with an intellectual elite at its helm. Thomas dreams of a simplistic republic of virtuous farmers. And as their disagreement grows into a full-scale battle, James Madison, who can't wrap his head around Alex's financial plans, bails on his old Constitution-defending friend to cozy up with his fellow Virginian, Tom. Oh, and on that note, James is about to blow a gasket over the next part of Alexander's financial plan,

creating a national bank. It's now December 1790. We're in America's new capital city, Philadelphia, where Alexander is asking Congress to create a central bank. Like most other parts of Alexander's system, this bank is based on a European model but has some unique twists. In this case, the twist is that Alexander's bank will be almost entirely privately owned. The government will only hold one-fifth of the bank's capital. The government will only choose one-fifth of the bank's capital. The government will only choose one-fifth of its directors. So the private sector will basically control this thing. How will the government have any say? Well, the treasury secretary will always have access to its books, and Congress could always choose to not renew the bank, which means

the mostly private bank will, in the long run, do what's in the nation's interests, like act as a depository for tax income, lend the government money, and issue paper money backed by hard currency. That last one's crucial. Cash is so scarce in some parts of the country, farmers are using tobacco warehouse receipts to barter for supplies. Alexander hopes that by creating well-circulating paper money, everyone, from farmers to manufacturers, will be able to participate in a growing economy. Again, Alex's brilliance is too much for many in Congress. The bank has two major obstacles. First, farmers. They distrust and rarely understand banks. And by distrust, I mean they see banks as the tool of Satan himself. Farmers and planters at this time are, by and large, creatures of debt,

which leads them to think the lenders are trying to cheat them at every turn. And with a barter economy still existing in parts of the country, like pockets of the agricultural south, even intellectual James Madison doesn't get banks. To quote, Would any plain man suppose a bank had anything to do with trade? Close quote. Oh little Jemmy. So again, the regional nature of America's economy rears its ugly head as Alexander tries to convince Congress, with plenty of Southerners who mistrust banks, to vote for a national bank. Thankfully, he has enough votes in the North, and the bank passes. But there's another problem. With support from Thomas Jefferson, James Madison continues to

assail the bank presented by his former northerner friend on constitutional grounds. He argues that in, quote, reviewing the constitution, it was not possible to discover in it the power to incorporate a bank. Close quote. The bill lands on George's desk in February 1791. He has 10 days to sign or veto it. George asks Edmund Randolph for an opinion. Edmund gives a poorly reasoned BS response in which he says the bank probably isn't constitutional. Thanks for nothing, Ed. George asks Thomas what he thinks and the Secretary of State rips Alexander's bank apart. In fact, he gets Madison to help him write a memo urging George to veto the bill. Thomas insists that the bank is unconstitutional, citing the necessary and proper clause in Article 1, Section 8.

Tom defines necessary as indispensable. And while he doesn't put this in his memo, Thomas, as an agrarian southerner, thinks banks are truly abhorrent institutions, created to swindle the poor, chain farmers to their credit lines, and create a greedy, anti-Republican society. This is probably as good a point as any to point out the worldview of 18th century Southerners. Tom, like many other Southerners, sees the South as virtuous. I know what you might be thinking. But they enslave people. Yes, they do.

And I'm not defending that. We're just trying to understand their view. They see themselves as honest farmers. In fact, the immoral ones in the southern mind are those northerners who pursue filthy lucre through banks and business, not honest farm work. I'm not asking you to agree. I sure as hell don't. But we have to understand how they view themselves if we want to understand the

past but back to the story George then asks Alexander for his opinion Alexander characteristically spends the next five days writing a 15,000 yes thousand word essay in defense of the bank. Basically, he argues that the Constitution contains implied powers so that the government can carry out its necessary business. He hands the defense pamphlet to George on Wednesday, and that's it. Game over. George is sold on the bank. He signs the bill that Friday, February 25th, 1791. And that's the straw that breaks the camel's back. After the bank, Thomas is fed up with feeling sidelined. He's convinced that Alexander has George wrapped around his corrupt little banking finger. Thomas Jefferson and James Madison are organizing an opposition party. Yes, we have the

roots of our first political parties now forming. And while James and Alexander have been on the outs for a long time, this national bank just crushed any hope of reconciliation created by that dinner deal. It's a damn shame. Their friendship had so much promise. They could have had a great couple name like Maddleton or Hamilton. But no, the National Bank puts the kibosh on all of that. Up to this point, Tom and James have only opposed the president's Hamiltonian policies. But now they're getting personal, and they're doing so through the press. In October 1791, Thomas and James hire a satirical writer and friend of James, Philip Frenno, to attack George and Alex in the National Gazette. Thomas puts Philip on the State Department's payroll as a translator. The audacity of Thomas and James is incredible. Putting an opposition newspaper editor in a government position with a government stipend would be grounds for immediate resignation today.

And in fact, Alex calls on Tom to resign over this. But Thomas doesn't do it. In fact, he doesn't see this as disloyal or dishonorable. He thinks he is being loyal to the greater American ideals of the revolution by opposing programs and practices with which he disagrees. So how does Alexander respond? Well, it's not like he's a stranger to knocking people through newspapers. He's an old pro. In fact, unlike Tom, Alex doesn't need someone to do his dirty work. He responds in kind through the Gazette of the United States.

By the summer of 1792, everyone's under attack. Thomas, James, and Alexander are all using newspapers to attack one another, and George is taking hits from opposition newspapers. They write under thinly-veiled pseudonyms so that they can claim deniability, but the readers understand exactly who is attacking whom. I know, real mature founding fathers. Hey, would you care for a taste of it? In August, Alex goes for the jugular in a knock against Thomas.

Check this out. I quote, Is it possible that Mr. Jefferson, the head of a principal department of the government, can be the patron of a paper, the evident object of which is to decry the government and its measures? If he disapproves of the leading measures, could he reconcile it with the principles of delicacy and propriety to continue to hold a place in that administration, and at the same time be instrumental in vilifying measures which have been adopted by majorities of both branches of the legislature and sanctioned by the chief magistrate of the union? Did you follow all of this?

Tom and Alex are both founding fathers, serving in the same presidential cabinet no less. I told you when we started this episode they were going to make cage fighting look like a walk in the same presidential cabinet no less. I told you when we started this episode they were going to make cage fighting look like a walk in the park. I think we just lived up to that. George has to step in before his cabinet members rip each other to shreds. In August, he writes to Alexander and Thomas and begs them to stop making these irritating charges against each other. To Thomas, George adds, and I quote, I have a great, a sincere esteem and regard for you both. Close quote. But these two accomplished founders just can't see the good in each other. The stress of George's first term nearly does him in. He's ready to step down as the still fighting like jealous kids,

Alexander and Thomas, plead with their surrogate father to stay in for one more term. The nation's still fragile with regional infighting and foreign intrigues threatening at every turn. Tom implores, quote, North and South will hang together if they have you to hang on. Close quote. Meanwhile, Alexander appeals to George's ego.

To quote him, Your declining the office would be deplored as the greatest evil that could befall the country at the present juncture and is critically hazardous to your own reputation. Close quote. George has survived deadly diseases, ambushes, insubordination, valley forge, and charging straight into enemy fire. He's never flagged when his country calls.

Will it really be the bickering of two other founding fathers that breaks him? Musical score composed and performed by Greg Jackson and Diana Averill. For a bibliography of all primary and secondary sources consulted in writing this episode, visit historythatdoesntsuck.com. Join me in two weeks where I'd like to tell you a story. HTDS is supported by premium membership fans. You can join by clicking the link in the episode description. My gratitude to you kind souls providing additional funding to help us keep going and a special thanks to our members whose monthly gift puts them at producer status andy thompson anthony pazulo art lane beth chris jansen bob drazovich brian goodson ronwin cohen carrie begel charles and shirley clindamon charlie

magis chloe trip christopher merchant christopher pullman david defazio david rifkin denke durante spencer donald moore donna marie jeffcoat, Ellen Stewart, Bernie Lowe, George Sherwood, Gurwith Griffin, Henry Brunges, Jake Gilbreth, James G. Bledsoe, Janie McCreary, Jeff Marks, Jennifer Moods, Jennifer Magnolia, Jeremy Wells, Jessica Poppock, Joe Dovis, John Frugal-Dougal, John Boovey, John Keller, John Oliveros, John Ridlavich, John Schaefer, John Sheff, Jordan Corbett, Joshua Steiner, Justin M. Spriggs, Justin May, Kristen Pratt, Karen Bartholomew, Cassie Conecco, Thank you.