HAMILTON, Alexander. Report of the Secretary of the Treasury to the House of Representatives relative to a Provision for the Support of the Public Credit of the United States...Presented to the House on Thursday, the 14th Day of January 1790. New York: Francis Childs and John Swaine, 1790. Folio, in modern half morocco binding, but PRESERVING THE ORIGINAL BLUE PAPER WRAPPERS, contemporary holograph correction onB1. Provenance: Senator William Johnson (1727-1819), Federalist, Connecticut (signature on upper wrapper; likely the publisher's presentation signature).
THE FOUNDING DOCUMENT OF AMERICAN CAPITALISM: HAMILTON'S BOLD AND CONTROVERSIAL FINANCIAL PLANS FOR THE NEW REPUBLIC
A FINE COPY OF ONE OF THE LANDMARK DOCUMENTS IN AMERICAN POLITICAL AND ECONOMIC HISTORY. Hamilton sets forth his plan for strengthening the nation's public credit and significantly increasing the size of the national debt. Drawing on his reading of Hume, Necker, Montesquieu, and Hobbes, Hamilton makes a forceful case for the connection between financial strength and political and military might. "Had Hamilton stuck to dry financial matters," writes biographer Ron Chernow, "his Report on the Public Credit would never have attained such historic renown. Instead, he presented a detailed blueprint of the government's fiscal machinery, wrapped in a broad political and economic vision" (Chernow, Hamilton, 297).
Hamilton calls for the Federal government to pay off the $54 million national debt at par value, and for the national government to assume the $25 million in outstanding state debts. "States, like individuals, who observe their engagements are respected and trusted," he writes, "while the reverse is the fate of those who pursue an opposite conduct." Hamilton hoped the expanded public debt would tie wealthy investors closer to the new government, making them its protector and champion. Beyond that, he hoped the nation's financial strength would give it the means to expand and someday rival the great British empire, which Hamilton so admired. To pay for these steep obligations new taxes would have to be raised, and Hamilton borrows from the language and spirit of the non-importation efforts during the Revolutionary War era, and calls for duties and wines and spirits, which he calls "foreign luxuries" and "pernicious luxuries."
The Report provoked a storm of opposition, with the proposed higher taxes being the least of the objections. The portion of the plan calling for the redemption of old Continental Congress notes at par value led to charges of insider trader and claims that New York stock speculators were buying up the old notes for pennies on the dollar from poor, unsophisticated former Continental Army veterans who had received them as payment for their wartime service. Hamilton anticipates this criticism in the Report when he acknowledges that some of the old securities may have traded hands but that most were still in possession of the original recipients. James Madison thought this ridiculous, and saw Hamilton's funding scheme as nothing less than a betrayal of the Revolutionary veterans-and said so on the floor of the House of Representatives. Madison's opposition was a personal shock to Hamilton, causing not just a personal breach between them, but laying the basis for the two-party adversarial system that has characterized American political life from that day to this.
The redemption of the Continental notes squeaked through Congress. But the anti-administration faction--or Jeffersonians--as they came to call themselves, objected even more strongly to the idea of the Federal government assuming the state debts. To Southerners and Virginians especially, this seemed to tilt the balance of power too far away from the states. They objected on principal to the idea of a large, long-term national debt, fearing it would make the government captive to the bankers and stock manipulators.
The House rejected the assumption bill by 31-29 votes on 12 April 1790, and the plan seemed dead. Then Jefferson launched his great gambit--the "dinner table compromise." Over a sumptuous repast in his Maiden Lane lodgings on 20 June, Jefferson got Hamilton to agree to a deal where the Virginia delegation would vote for assumption in return for Hamilton pressuring the Pennsylvanians to agree to let the nation's capital pass from Philadelphia to the Potomac in ten years' time. The deal worked. The Residence Act passed on 10 July, and on 26 July the Assumption Bill squeaked through the House of Representatives.
RARE: Only three copies have appeared at auction in the last 35 years. Church 1253; Evans 22998.