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2nd Congress (1791-1793)
International Context
Haitian Revolution
The Anglo-Saxon Protestants watched as Saint-Domingue’s (Haiti) 500,000 black-skinned slaves revolted against their 50,000 French owners (August of 1791). The self-liberated (fugitive) black-skinned slaves attacked the northern settlements first, and then began destroying plantations, and killing the French. The Haitian Revolution was the largest black-skinned slave rebellion in the Western Hemisphere and Haiti was France’s wealthiest overseas colony. Haiti’s black-skinned slave labor generated more revenue than all 13 British colonies combined.
Barbary Pirates
By the Second Congress, approximately two dozen Americans remained held in Algeria as Barbary slaves, and they were being used for hard physical labor. Writing to Congress in April 1791, the captives reported that the Spanish had paid for their citizens and wanted to know why America’s leaders kept bargaining with the Algerians. The Barbary Pirates, he said, took these as signs the Americans were disingenuous about having them returned.
Domestic Context
First Census
The first U.S. Census was completed by February 1792. Had the Constitutional Convention agreed to the full population of black-skinned slaves for purposes of apportionment, Maryland, North Carolina, and South Carolina each would have received one additional Representative, while Virginia would have received an additional three Representatives. The census included the original 13 States, plus the districts of Kentucky, Maine, and Vermont, and the Southwest Territory (Tennessee). The final tally was 3,919,023. Of these, almost 700,000 were black-skinned slaves (approximately 18% - or one in every five - human beings living in America). The U.S. population stretched 1,000 miles east-to-west, from the Atlantic to the Mississippi, and about 2,000 miles from Florida, on the south, to the Great Lakes, on the north. Five cities had populations over 10,000 (Philadelphia, New York, Boston, Baltimore, and Charleston) and Philadelphia, the largest, barely had 50,000. More than 90% of Americans lived in the countryside on scattered farms and plantations. Except for a few small ironworks and many shipyards, America was thoroughly agricultural and lacked a manufacturing base. Most American farms barely supported the large families that lived on them. They exported their surplus farm produce, and imported British manufactured goods. In the interior, the settlements were small and stumpy pockets in a heavily forested land populated with Native Americans.
America’s IPO
When the Bank of the United States appeared on the public market (July 4, 1791), would-be investors heavily oversubscribed. The Bank’s IPO was the largest in the country to date. Many of the initial investors were foreign, a fact that did not sit well with many Americans, even though the foreign shareholders were explicitly prevented from voting. The IPO was offered in subscriptions, or “scrips,” a down payment on Bank stock. When the scrips went on sale, they sold so quickly that they began to be sold on a secondary market. In response to the Bank, state-level politicians created new state-chartered banks and defensive financial instruments. Some states feared the Bank and others wanted a Bank branch in their state. In this manner, through individual-level acts of capitalist rationality, individuals both over-purchased the new Bank and America became home to new state-chartered private banks. Both of these flooded the new country with currency and provided Anglo-Saxon Protestants a means to expand onto public lands, purchase black-skinned slaves, and grow crops. With a starting capitalization of $10 million, $2 million from the American Government and the remaining $8 million by European and domestic investors the Bank was the nation’s largest financial institution and corporation of any type.
The Bank managed the U.S. Treasury’s interest payments to European investors, acted as the nation’s primary private lender, and was the federal government’s fiscal agent (collecting tax revenues, securing the government’s funds, making loans to the government, transferring government deposits through the bank’s branch network, and paying the government’s bills). Although the U.S. Government was the largest shareholder, the government did not directly manage or profit from the Bank. The Treasury Secretary had the authority to inspect the books, require that the Bank provide weekly statements, and could remove the government’s deposits at any time for any reason. To avoid inflation and the appearance of impropriety, the Bank was forbidden from buying U.S. government bonds. Hamilton used the Bank to grow and expand America’s economic system of slaver-capitalism.
The Bank helped secure the price of bank scrips, and the price in the secondary market initially doubled, before going even higher. Investors needed the U.S. Treasury to survive so they would receive future payments, and this caused securities to rise even higher. America seemed to be going well until, later that year, a former Treasury Department bureaucrat (William Duer) attempted to corner the U.S. securities market. Unfortunately for Duer, he became highly over-leveraged while the Bank of the United States and state-chartered banks expanded the nation’s credit. With more credit available, Anglo-Saxon Protestants borrowed and new scrips constantly circulated. In response, banks needed specie to handle depositors and Duer’s lenders recalled his massive loans. Within months, Duer’s singular debt caused America’s first financial panic. With no institutional or historical guidance, Hamilton calmed the markets by working with the Bank of New York and authorizing open market purchases..
In response to the Panic of 1792, twenty-four New York financiers met under a buttonwood tree in New York City to discuss the future of America’s financial securities business. This meeting culminated in the “Buttonwood Agreement,” one of the most important financial documents in United States history. The signatories, none of whom were connected to the U.S. Government, agreed to bring security transactions to one central place, to have uniform prices, and to only trade with one another. Finally, they agreed their organization would charge a 1% commission. The Buttonwood Agreement created a trading monopoly and central market which allowed America’s financiers and capitalists to trade on a single exchange. This enhanced the exchange members’ individual-level economic status, and made New York’s financial community competitive with Philadelphia’s. This was a key moment in private capital developing America’s economic system of slaver-capitalism.
“Hamilton used the Bank to grow and expand America’s economic system of slaver-capitalism” - is this true? From everything I’ve read, Hamilton was not a supporter of slavery but very interested in creating industrialization.
Your Amazon link at the top doesn’t work. Just an FYI.