Sunday, October 27, 2013

Robert Morris, Financier of the Revolution?



The New Nation, By Merrill Jensen

The Myth

Robert Morris was “Financier of the Revolution.”

The Reality

To give Morris the title of financier of the revolution is inappropriate.  Jensen suggests the myth is absurd, “if for no other reason than the fact that he did not take office until the revolution was virtually over.”  He took office in September 1781, about one month before Yorktown!

Yet there are other reasons.  At the end of the Confederation, he stilled owed money to the United States.  In 1790, the books of the government showed him to be the largest individual debtor.  (Page 57, 60, emphasis added)

No attack on Morris was more extreme than that by William Lee who declared him a most dangerous man in America.  He said that Morris was bankrupt at the beginning of the war, left the country bankrupt at the end of it, but that at the same time “amassed an immense fortune for himself….” (Page 367)

At least a little justice was served.  Morris lost his fortune in 1798 due to failed land speculation.

The Man who Put Crony in Crony Capital

The concerns about Morris arose as early as 1775:

Laurens swore that men like Morris made “patriotism the stalking horse to their private interests” and hid behind Washington as they did so. (Page 368)

Makes one wonder why Morris signed the Declaration of Independence….

There is so much discussion these days about the revolving door between Washington and Wall Street.  Robert Morris didn’t bother with a door; he insisted that there be little more than a breezeway:

He must be allowed to continue his own private business; he must appoint all officers in the department; he must have absolute power to appoint and dismiss anyone having to do with the spending of money.  Unless he had such powers he insisted the “the business of reformation” could not be managed. (Page 57, emphasis added)

Congress agreed to these conditions, although not without opposition.

The multiple hats worn by Morris did not go unnoticed:

…many of the merchants began to look at Mr. Morris with jealous eyes, and conceive that a connection of the financier, the president of the bank, and the receiver of continental taxes have a flow of money at their command which may be employed to the great prejudice of all…. (Page 228)

Their suspicions proved valid:

Morris assured that good bills drawn on Dutch and French banks were applied in favor of his business associates, while other creditors received little, if any, relief. (Page 370)

According to Dr. Edward Bancroft:

…Morris would resign as soon as he could “extricate some of his friends” and that he was endeavoring to do this “by the money borrowing in Holland…” (Page 370)

The man makes Henry Paulson, who also stayed in office long enough to extricate his friends from financial woe, look like an altruistic public servant.


One such friend was William Bingham, an agent in Martinique during the war and during Morris’s tenure over the treasury:

He went there as a clerk.  He returned to the United States after the war as one of the wealthiest men in the new nation.  Before the end of 1781 he had claimed and been paid over a half million livres Martinique, for sixty per cent of which he presented no vouchers. (Page 381)

After the war, and under a board of Treasury independent from Morris, it was determined that Bingham owed the United States nearly 2.5 million livres Martinique. (Page 381)

The Planned Military Coup

Robert Morris’s name is well known, but the significance of his public life is but dimly realized. …he was for a time the figure around which centered all those men who sought to give the new nation a powerful central government and who, in 1783, contemplated without many qualms the possibility of doing so by force. (Page 366)

They saw in him the spearhead of a movement to overthrow the federal government and to establish a dictatorship.  His fulsome protestations of disinterested patriotism did not convince his enemies, nor even many of his friends.  (Page 57)

The nationalists, among which Morris was a leading figure, looked at the possibility of bringing together the army – with its disgruntled members who were owed back pay and who also dreamt of the possibility of life-long pensions – and the creditors: an early type of military-industrial complex almost two centuries before Eisenhower’s warning. 

They began this work in early 1783.  Members of the military held official meetings with Congress…

…but…also engaged in unofficial meetings with some of the nationalist politicians, including Robert Morris, Gouverneur Morris, Alexander Hamilton, and James Wilson.  Such men saw in the clamors of the creditors, and the discontent of the officers, an opportunity to unite the two groups to secure national revenue, and even, perhaps, the kind of government they had been unable to get by either constitutional amendment or interpretation. (Page 69)

It was these backroom and unofficial meetings that the agenda was established.  The army decided to throw their lot in with Congress for the settlement of accounts, and not the individual states – the desire was to establish a permanent national revenue.  This was backed with a threat regarding the possible actions that disgruntled soldiers might take absent Congressional action. (Page 69, 70)

Ultimately Washington spoiled the plot, as he did not throw in with the scheme.  As many officers would be certain to follow Washington, the planned coup died, stillborn.

Bank of North America

A couple of specific examples of Morris’ dealings will add some color to the picture.

The Bank of North America was funded with the receipt of specie borrowed by Congress from France.  Morris, responsible for the Treasury, used some of this cash to buy stock in the bank!  The bank then loaned money to the United States at interest – money that the United States had borrowed in the first place. (Page 228)

Morris and his friends held a controlling interest in the bank once all shares were considered.  The bank made money from the beginning.  Shortly after the peace, the bank declared a dividend of 6.5% for the six months beginning January 1783.  During the next six months, the dividend rose to 8 percent. 

French Farmers General
(Page 202 – 203, except as noted)

One of the complaints regarding the time under the Articles of Confederation was that trade and the economy were weakened by the lack of a coercive central government.  While also another myth, to the extent that there were reasons to complain it turns out Morris played a leading role.

France was long the largest export market for American tobacco.  With the end of the Revolution, this trade no longer had to be routed through England.  The powerful and corrupt French Farmers General, in control of the importation of tobacco, did not like the price of American tobacco, and found a willing partner in Robert Morris to help drive the price down.

A contract was placed with Morris to be the monopoly provider of tobacco to France.  The Farmers General agreed to pay a price of thirty-six livres per hundred for the tobacco.  They advanced 1,000,000 livres to Morris such that he had capital to manipulate the American market.

Morris was able to drive the market price down from forty shillings of Virginia money to twenty-four shillings.  He was able to drive down both the price of tobacco and the discount rate offered by the Bank of North America.

More and more it seemed to Virginia planters that they had merely gotten new chains in place of old, but now they came from Philadelphia and Baltimore instead of from London and Glasgow. (Page 238)

Makes you wonder whose independence was won.

Conclusion

The nationalists, of which Morris was a leading figure, constantly pushed for a coercive central government with an independent income. They pushed for this throughout the Revolution and throughout the period under the Articles.  They finally got their wish under the Constitution.

The behavior of Robert Morris should make abundantly clear the intent of those behind the Constitution.  The desire for independence was a desire to shed foreign control in favor of local control, with the proceeds accruing to an American government as opposed to a British government.

This is the reality within which Robert Morris played a leading part. 

1 comment:

  1. Thanks for turning me on to book

    ReplyDelete