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Summary: During the Panic of 1792, Alexander Hamilton, our first Treasury Secretary, directs the President of the Bank of the United States to ready $10,000 in gold for shipment to Virginia. Alexander Hamilton. Letter Signed, as Secretary of Treasury, to Thomas Willing, President of the Bank of the United States. Treasury Department [Philadelphia], March 24, 1792. 1 p., with integral address leaf. Inventory# 21387 $15,000
Complete Transcript: Treasury Department, March 24, 1792
Sir
I shall probably have occasion to send to the Commissioner of Loans of Virginia, ten thousand dollars in species, by the early stage on Monday morning and I request that this sum may be held ready in gold this afternoon before the close of the Bank or may be in a situation to be delivered at seven on Monday morning.
Sir/ Your obedient Servant
Alexander Hamilton [In Hamilton’s hand:] PS It will oblige me/ That it be put up in such package or packages as will be least liable to discovery Thomas Willing Esqr / President of the Bank of the United States [address leaf:]
Alexr Hamilton. Treasury Department
Thomas Willing Esquire/ President of the Bank of the United States Historical Background:
This letter of instruction was written during a turbulent season for both the secretary and the nation. Hamilton was just then entering a nasty newspaper war with Thomas Jefferson and James Madison, in part originating in the opposition of the Virginia politicians to Hamilton’s financial program, including the Bank of the United States [B.U.S.]. On March 10, 1792, large-scale speculation in B.U.S. stock produced a financial panic. New Yorker William Duer, formerly Hamilton’s under-secretary, led the euphoric spending spree, but his own drive was fed by a need to climb out of a chasm of personal debt from prior frontier land purchases. The bullish market prompted outsiders to accuse Hamilton of corruption, though he himself never profited from his relationship with the B.U.S. When Duer’s creditors began to harass him, Duer started selling off his shares in the B.U.S., setting off the panic. Hamilton showed his integrity in the panic. Of Duer, he wrote, “There should be a line of separation between honest men and knaves, between respectable stockholders and dealers in the funds and mere unprincipled gamblers.” As historian Ron Chernow writes, “Instead of bailing out Duer, Hamilton had the Treasury purchase large amounts of government securities in the marketplace. By doing so, he steadied the market and also bought back public debt at bargain prices. The money came from the sinking fund he had set up to redeem public debt (from the Revolutionary War, as part of Hamilton’s Funding and Assumption Program in 1790).”
Hamilton’s infusion of liquidity stemmed the panic. The Panic of March 1792 did have a silver lining—The Buttonwood Agreement was signed roughly two months later at 68 Wall Street:
“[T]he need for responsibility and trust underscored by the Panic prompted 24 merchant-brokers to sign the "Buttonwood Agreement," in which they agreed to trade with one another and establish minimum commission rates. The agreement, signed under a buttonwood tree where the brokers regularly met, led to the establishment of NYSE.” (NYSE.com)
As Chernow continues, “a year later, trading in government bonds grew so brisk that the Buttonwood group adjourned to an upstairs room of the new Tontine Coffee House, a three-story brick structure at Wall and Water Streets, right near Hamilton’s New York home. Its first president was Archibald Gracie, whose East River mansion was to house New York mayors.” Thus, it could be said that Alexander Hamilton served as midwife to Wall Street as he helped stabilize the nation’s finances in the post-revolutionary era. Incidentally, $10,000 was a huge amount of money in 1792—employing the relative share of GDP as a baseline for comparing historical worth, it would be equal to $730 million today! The payment would have been made in foreign gold coins, as the United States Mint (another of Hamilton’s visions) had yet to begin striking its own coinage. Alexander Hamilton (1757-1804) was an American statesman born out-of-wedlock in the West Indies. In 1777, Hamilton became George Washington’s aide-de-camp and, in 1781, distinguished himself leading a regiment at Yorktown. After the war he became one of the most eminent lawyers in New York. In 1786, Hamilton took a leading part in the Annapolis Convention, preparing the way for the Constitutional Convention a year later. He conceived The Federalist Papers, a series of essays defending the new Constitution, and he personally wrote 51 of the 85 papers. Upon the establishment of the new government by Washington in 1789, Hamilton was appointed Secretary of the Treasury and restored the country’s finances to a firm footing. In 1795 he resigned his office, but remained the de facto leader of the Federalist Party, and was foremost in the party strife of 1800-01. He died on July 12, 1804, a day after being shot by Aaron Burr in a duel. Thomas Willing (1731-1821) was a Philadelphia merchant, financier and delegate to the Continental Congress. Through long and distinguished tenures as president of the Bank of North America (1781-1791) and president of the Bank of the United States (1791-1807), Willing played a major role in bringing stability to the early nation’s economic affairs. References:
Chernow, Ron. Alexander Hamilton (New York, 2004).
Wright, Robert, “Thomas Willing (1731-1821): Philadelphia Financier and Forgotten Founding Father,” Pennsylvania History 63 (October 1996): 525-560.
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