Every Man a Speculator

A History of Wall Street in American LifeBy Steve Fraser

HarperCollins Publishers, Inc.

Copyright © 2005 Steve Fraser
All right reserved.
ISBN: 006662049X

Chapter One

Revolution and Counterrevolution

One of the strangest documents ever authored by a public official appeared in 1797. Soon to become known as the “Reynolds Pamphlet,” its formal title, so typical of eighteenth-century literature, amounted to a miniature essay in its own right: “Observations on Certain Documents Contained in #s 5&6 of ‘The History of the United States for the Year 1796’ in which Charges of Speculation Against Alexander Hamilton, Late Secretary of the Treasury, Is Fully Refuted by Himself.” An accusation of financial malfeasance in office is, in itself, hardly an extraordinary occurrence, even when, as in this case, directed against a founding father. What makes the “Reynolds Pamphlet” at the same moment so titillating and so somber is the unimaginably bizarre combination of circumstances that gave rise to its publication. Those circumstances touched on the most intimate affairs and affairs of international gravity. Charges of financial impropriety notwithstanding, what was really at issue in the “Reynolds Pamphlet” was illicit sex on the one hand and global revolution and counterrevolution on the other.

Alexander Hamilton’s refutation is first of all a deeply humiliating public confession. He acknowledges not any financial wrongdoing, but rather that he engaged in an adulterous affair some years before, during his tenure as secretary of the treasury, with the wife of one James Reynolds. This adultery, he further reveals, was carried on, perhaps from the very beginning and certainly after a decisive turning point in the affair, with the full connivance of Mr. Reynolds. That odd moment arrived, according to the secretary, when James Reynolds confronted him with his knowledge of the relationship and a demand for $1,000. When Hamilton paid the money, Reynolds made it clear the adultery could continue, presumably in return for future installments. The secretary concludes the confessional part of his pamphlet by apologizing to his loving wife for these inexcusable transgressions. And he explains, only his sense ofhonor, the need to clear his name of the graver charge of official misconduct, could have driven him to expose his wife to this embarrassing and shameful ordeal.

Most of the “Reynolds Pamphlet,” however, runs in a very different direction. The whole ugly business is not, Hamilton contends, really about sex or even about financial hanky-panky. Instead he blames it all on the riotous spirit of Jacobinism loose in the world. Regicides and terrorists in Hamilton’s eyes, French revolutionaries had formed an infernal brotherhood with the noisome rabble gathered around Thomas Jefferson, his bitter political rival. Conscienceless foes, these American Jacobins will resort to any kind of calumny, will even exploit Hamilton’s moment of sexual weakness, to perpetrate monstrous lies not only about him but about all men of “upright principles.”

Hamilton is determined to defeat this “conspiracy of vice against virtue.” His pecuniary reputation remains “unblemished,” he avers, since during his whole term as secretary of the treasury he was indifferent to the acquisition of property. Yet his Jacobin enemies are so bottomlessly unscrupulous as to accuse him of sacrificing “his duty and honor to the sinister accumulation of wealth,” and of promoting “a stock-jobbing interest of myself and friends.” These charges, he notes, first surfaced in the earliest years of the new government, back in 1791, and when they did it was he, Hamilton, who demanded a formal congressional inquiry. That investigation, conducted by a committee whose majority consisted of his political opponents, showed that rumors of public monies being made “subservient to loans, discounts, and accommodations” for Hamilton and his friends were groundless. Yet, despite this complete exoneration, these slanders are being recirculated by those infected with the Jacobin conta-gion, including such distinguished statesmen as Senator James Monroe, not to mention Hamilton’s one-time corevolutionists and now inveterate enemies, Thomas Jefferson and James Madison.

And what then might be the connection between Jacobinism and the secretary’s sexual adventure? It turns out, according to Hamilton, that it was James Reynolds, the cuckold, and an otherwise obscure, frustrated place seeker, who first alleged that Hamilton had confided in him about a conspiracy to speculate in government bonds. It was that rumored conspiracy, purportedly conceived and captained by Hamilton, taking advantage of his unique position as the fledgling nation’s chief financial officer, which made the disreputable Reynolds and his wife tools of the Jacobin menace. People like Madison and Jefferson were scarcely concerned with Hamilton’s marital infidelities. Moreover, no matter how much they otherwise distrusted his motives, given the secretary’s impeccable reputation for integrity, it is doubtful they ever took seriously the charge that he was lining his own pockets. What they feared and truly believed was rather that Hamilton was the evil genius responsible for implanting at the heart of the virgin republic a system of finance that not only bred precisely the kind of conspiracy of speculators he was rumored to belong to, but, more fatally, a system of speculation that would raise to power a “moneyed aristocracy” intent on undoing the great democratic accomplishments of the Revolution. Not sex, not peculation, but the specter of counterrevolution turned Hamilton’s tryst into an affair of state.

How could they have come to feel this way? At least part of the answer lies in a vital detail of James Reynolds’s concoction. Hamilton’s chief coconspirator, so Reynolds claimed, was one William Duer. And it is in the career of William Duer that one can first glimpse how Wall Street found itself at the core of a great, life-and-death controversy over the fate of the American Revolution.

Continues…
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