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The Golden Touch

Robert Morris: Financier of the American Revolution

By Charles Rappleye
Simon & Schuster, 2010

Marcus Crassus, perhaps Republican Rome’s richest citizen, purportedly quipped that a man was not truly wealthy unless
he could raise, equip and sustain his own legion. During the American Revolution, when the rebel cause seemed poised to unravel, a Philadelphia merchant boasting his own wealth and power grabbed the reins of continental finance and for a time made good on the one-time Triumvir’s boast.

Charles Rappleye’s new biography, Robert Morris, breathes new life into the story of this Philadelphia merchant. We live in an age that has wrapped itself in an amnesiac’s faith in laissez-faire capitalism and if in this climate Ayn Rand can enjoy her own renaissance, why not restate the case for Robert Morris? Though Rappleye’s opinions about the utility and nature of capitalism are evident in this biography (and are certainly not
my own), he’s written an excellent, objective work about the practical and logistical hurdles the Revolution presented and how the man I’ve come to think of as The Great Facilitator confronted them. Rappleye is on point when he says:

Morris’s absence from the story leaves a gaping hole in our understanding of the social and political struggles that bedeviled the revolutionary war effort, led to the writing of the Constitution, and helped launch America as a financial superpower.” The consequences of his absence from the story, “is a curiously warped version of our national story, one that prizes the rhetoric and ideology of the founding epoch but fails to credit the essential pragmatism that distinguishes the American Revolution from so many other subsequent social upheavals.

More than many of the Founders, Morris came from humble origins and even rose to prominence through an occupation most of the contemporary Southern gentry viewed as ungentlemanly. He was born in England in 1734 to a merchant of the same name and Elizabeth Murpheto, a woman about whom we know nothing but a name (which is just about all Morris knew of her). When his father’s business pursuits brought him to the New World, young Robert was left behind to be raised by his grandmother. Years passed before he was called to join his father in Maryland at age 13, but even then he was soon sent away again to Philadelphia and made apprentice to a shipping firm. Here Morris quickly found his niche:

Besides his aptitude for numbers, Morris demonstrated a natural feel for markets and the nerve to put his instinct into action. The story is told of one early occasion, when Charles Willing (his “master”) was away on business, Robert learned from an arriving ship captain that the price of flour had jumped in the foreign market. Robert promptly purchased all the flour then available in Philadelphia, leaving competing merchants to pay advanced prices while Willing & Co. shipped the available supply to Europe. This was an astonishing display bravura for a boy still in his teens, an early example of the adroit maneuvers that would carry Morris to the heights of power and influence in the world of American commerce.

When the firm passed from father to son, Thomas Willing, who had become like an older brother to Robert, quickly made the young man a partner. If the story of Robert Morris’ life had ended there, on a purely sociological level such a transformation from bastard to legitimate businessman might have been rightfully deemed a meteoric rise in an age of limited social mobility. But Morris wasn’t content to be a trader of a middling sort; he sought preeminence:

What set the firm of Willing & Morris apart, what helped elevate them above their competitors, was their spirit of creativity… underwriting government projects through bonds and other promissory notes… gaining hands on insights into the process of credit and capital formation at a time when most entrepreneurs engaged only in those operations they could finance from their own funds… Morris later put the same principles to work on a grand scale, endeavoring to restore the finances of a beleaguered national government. It was a mercantile world, but Morris and his partner were practicing capitalism.

As he prospered in the late 1760’s and early 1770’s, Morris indulged his taste for society and fraternizing, joining numerous clubs and associations. When he added a socially upward marriage and had a country retreat for his growing brood to his resume, he was fully dressed himself in the trappings of the successful businessman and burgeoning civic leader. In addition to being a boisterous, well-liked, well-connected and affluent man, his occupation raised his esteem in the eyes of others, as Rappleye points out:

… in colonial America, where most people made a living by toil, the station of the merchant was something quite rarefied. They lived by their wits, but more than that, they lived by their character: partners and investors had to rely on a merchant’s word as his bond; financial arrangements rested on individual credit, established through a past record for fair dealing. It was presumed that these assets flowed from a scrupulous sense of personal integrity…

Being held in such high regard by the Philadelphia, Robert Morris found himself thrust into the rush of events. He was at the center of the community’s protest of Britain’s attempts to centralize authority over and raise revenue from the colonies, starting with the Stamp Act. But Rappleye does an excellent job of letting the reader know the limitations of Revolutionary consciousness in 1765 for both Morris and society:

Morris sat on a number of these committees, but it would be a stretch to call him an activist. He was a committeeman, garrulous and sociable, and when the merchants were called to associate, he usually went along. But more than that, Morris was a merchant, twenty years along in a career that had brought him from obscurity to wealth and prominence. War with England was a distant prospect, the worst of several possible outcomes, and still just a distraction. In the mid-eighteenth century, life in Philadelphia had much to offer a rising member of its civic elite.

With Rappleye’s gentle shepherding, the reader is reminded of deeper truths that are often glossed over in most superficial and uber-patriotic understandings of the American Revolution. During the Stamp Act crisis, the situation was not at all where it would be a decade later when independence was declared. In 1765 people spoke of regaining their ancient liberties as Englishmen. At that point things were extremely salvageable, and only the most radical did not expect that things would be put right – as, indeed, seemed to happen with the Stamp Act’s repeal.

But after the brief thaw in relations between the colonies and the mother country, tensions rose again over fresh British attempts to exercise sovereignty. Morris was drawn back in. Like many men of the age, he publicly eschewed the pursuit of position and power but inevitably his name would always land on the list of candidates. In the wake of the boycotts declared by First Continental Congress, he was endorsed by both the radicals and moderates for the Committee of Inspection and Observation. In 1775 he added a seat on the Committee of Safety to help organize the city’s defenses, alongside Benjamin Franklin and John Dickinson. That same year he ran for and won a seat in the Pennsylvania Assembly and from there was sent (literally) across the hall as a new state delegate to the Second Continental Congress. It is worth noting that all these offices were held simultaneously.

John Adams once complained about the lack of progress within the Continental Congress, saying, “Every man in [Congress] is a great man, an orator, a critic, a statesman; and therefore every man upon every question must show his oratory, his criticism, and his political abilities.” To Adams, a man like Robert Morris must have been a breath of fresh air: he brought a steady, results-oriented approach with him to the Congress that over time would yield invaluable results for the budding nation. As Rappleye tells us, though he may have seemed as big and dimwitted as an ox on the surface, he was more like a bull with hay tied to his horns:

Morris… took no part in the elaborate disquisitions on colonial rights that preoccupied so many of his contemporaries. In all the time he would spend in the high councils of the Revolution, in all the debates over form and policy, Morris rarely ventured into the realm of theory. He was a pragmatist who moved easily within the mainstream of political action.

Rappleye does some of his finest work delving deep into the evolutionary process of the mainstream political action, tracking what was a very dynamic situation. The author could have relied on the comfortable platitudes readers on the American Revolution have come to expect, the standard canon describing the broad trends that caused first British Empire to come apart. But he chooses instead the harder and more rewarding approach, using colonial Pennsylvania as a case study for examining how the process of separation played out within communities and in the streets of Philadelphia. The incremental radicalization of colonial politics reached a tipping point there in 1776, where Morris, once popular with all, for the first time finds himself voted off the city’s Committee of Inspection. Rappleye describes the turmoil:

Suddenly, the lines that defined several political entities operating in Philadelphia began to blur. The radicals of Massachusetts and Virginia, until recently regarded with suspicion by the people of Pennsylvania, now found common ground with the local patriots. In Congress, in the Assembly, and in the committees, support for independence, an idea that was anathema just months before, was becoming the litmus test for anyone holding public office. For Morris, his removal from the committee marked a subtle but critical transition. Just a year before, a wave of dissent had borne him from outside the political establishment to membership in every important public body in the province. Now, in what must have felt like a dizzying turn of fortune, his brief tenure in office marked him as a member of the establishment who was an obstacle to the popular movement.

The rapid transition of colonial society toward independence eventually proved irresistible, but it was never close to unanimous.

Prior to 1776, the more militant “Eastern faction” led by the Adamses and Lees was held in check by the more moderate Middle States of New York, Pennsylvania and Maryland, whose larger loyalist populations held out hope for a peaceful reconciliation with the Empire, something similar to a pre-1765 footing. Now though, the moderates were eclipsed by the advocates of independence, but unlike (for example) John Dickinson, Robert Morris found himself on the right side of history. In Congress, Morris was installed on the Secret Committee, responsible for obtaining arms and ammunition. These necessities were often obtained through private contracting, through the delegates’ or their friends’ companies. Morris also served on the Marine Committee, where he was charged with trying to raise an American Navy. Most importantly, he served on the Committee of Secret Correspondence, aptly identified by Rappleye as the nearest thing to a State Department in the Congressional government. Through these three committees, Morris became a crucial nexus for virtually every facet of the rebellion’s military supply chain. One might think at this point Morris was doing enough for the cause, but he went further, putting his personal resources to work as well. It was too good of a business opportunity to pass up:

His firm, his ships, and his personal contacts were all deeply engaged in carrying out government assignments… the largest requisitions yet, totaling more than three hundred thousand dollars for arms and gunpowder, and cloth for tents, sails, and uniforms… the lion’s share[of contracts], more than half the total, went to Robert Morris.

At first glance, these contracts would suggest that Morris had a strangle hold on the committee system and used his political clout to siphon into his own coffers an inordinate, even scandalous share of the money issued by Congress. In each of these transactions, Morris was essentially making deals with himself. But Rappleye feels this interpretation fails to take into account the circumstances at the day and the thinking of the men involved, saying at this point Congress was little more than a loose alliance of colonies–a debating society with no administrative apparatus and no formal authority outside its chamber. In short, he says, everything that was to be done had to be done in-house almost forcing Morris to utilize his own network in order to accomplish anything.

Still, the possibility of collusion between Morris the businessman and Morris the government official inevitably raises suspicions in the minds of detractors, past and present. One particular charge that hung in the air was that Morris defrauded the government through shipping merchandise on his private account in the same hull with merchandise on the public accounts, and then if the ship was taken at sea he’d alter the accounts to minimize his losses and shift the bulk of it to the public account. Proving this would become the obsession of Virginia’s Arthur Lee, a would-be American Robespierre, who possessed of a Nixonian ability to create enemies and hold grudges. He was insecure, overzealous, obsessed with virtue and haunted by visions of conspiracy; he made the powerful Morris the target of his crusade to purify the Revolution. Lee would fail to substantiate his charges against Morris, but even Rappleye has to admit the convoluted circumstances precluded Morris’ outright exoneration:

Considering the scattered accounts of the Secret Committee and the chaotic state of wartime commerce in general, a perfect verdict on Morris’s business practices is probably impossible… while it is true that Morris greatly augmented his fortune during the course of the war, it is also clear that his commercial endeavors while in office, and particularly for the Secret Committee, often were conducted at a loss. It cannot be stated conclusively which activities profited him the most, but Morris had a variety of legitimate enterprises that were each more lucrative than his government work.

In 1779 Morris relinquished his seat in the Continental Congress, still under a cloud but not condemned by the continued whispers of corruption. At the same time a sweep by the radical ticket in local elections cost Morris his seat in the state assembly returning him to the private sector. Not long after Congress embarked on an official policy of currency devaluation and economic decentralization, largely turning over fiduciary responsibilities to the states.

However, by this time it was also becoming clear the Revolution’s finances were untenable. With increasing regularity, rebel soldiers were becoming fed up with the poverty their service brought upon them. One example Rappleye includes was the 1781 mutiny of the Pennsylvania line. Continental soldiers set out from Morristown to Philadelphia to lay their grievances directly before Congress – ignoring their general ‘Mad’ Anthony Wayne and killing another officer who tried to stop them. A contemporary confirmed that the men hadn’t “seen a paper dollar in the way of pay for near twelve months,” and food and clothing was equally scarce.

That mutiny was thwarted, but the scare motivated the Congress to reform itself, abandoning the cumbersome committee system under which it had labored since the beginning of the rebellion. More efficient executive departments were instituted instead.

One of those new departments was Finance and there was little doubt who would sit at its head. As Rappleye tells us, “Morris was generally acknowledged as the body’s [Congress] consummate capitalist, the member who, more than any other, understood how to put money to work.” Rappleye then properly identifies the Superintendent of Finance’s job as more closely related the modern presidency in the scope of its responsibilities, and despite the fears of centralized power voiced by some, Morris’ appointment went through at the same time the Articles of Confederation were finally adopted.

The return of Morris and the institution of a new national government heralded the end of radical supremacy and a strengthening of moderates, now branded Nationalists. Quickly after his return to public life Morris submitted to the Congress a proposal to establish the Bank of North America in order to help restore Congress’ credit after years of issuing unsupported paper currency and to spur the domestic economy by drawing dormant capital back into circulation. “The bank would be a private institution,” Rappleye explains,

It would lend to and receive deposits from the Congress, and banknotes would be receivable in taxes, but its lifeblood would be commercial loans payable in thirty or sixty days. The loans would be issued in notes payable on demand that would circulate as an independent paper medium, their security based on public faith in the bank, not the government. The bank would be independent, governed by its investors.

The failure of public credit and the collapse of the currency were devastating to the Continental economy and threatened the future of the Revolution. Morris’s bank further sought to energize the private credit market and kick-start individual initiative by eliminating price controls and tender laws. In this way he is responsible for irrevocably placing the American economy on a free market footing where “virtue and duty” would be replaced by the more reliable fuel of self-interest. But according to Rappleye, Morris’ hopes for the bank were even grander:

In the process of reviving the American economy, he hoped to forge a new, national identity out of what was still a fractious, disparate people. It was the ultimate Nationalist institution, to be anchored in mundane transactions of daily life. “One very strong motive which has impelled my conduct,” he [Morris] explained to[John] Jay, “is to unite the several states more closely together in one general Money Connection, and indissolubly to attach many powerful Individuals to the cause of our country, by the strong Principle of Self Love, and the immediate sense of private Interest.” Here again was the voice of the realist, proposing that the government of the new republic rest its claims to allegiance on the inherent self-interest of its citizens, rather than their virtue or their fealty.

This is not exactly heady stuff; it’s certainly not a “times that try men’s souls” or “mystic chords of memory” moment, but it reinforces Rappeleys’s assertion that the true engine of the revolution’s success were the moderate realists, not the doctrinaires.

Bank Note of the Bank of North America

The current political wrangling over national economic issues adds a dimension of poignancy to Rappleye’s biography that rarely exists in books about the Founding Fathers. The possibility of the United States defaulting on its national debts has been called “unprecedented” by the media. However, there’s something oddly familiar about the threat of such calamity looming over the nation. During his tenure as Superintendent of Finance, Morris faced a similar situation.

Morris’s reforms and adroit floating of paper allowed the United States to limp towards independence in 1783 and barely survive the decommissioning of officers and the discharge of soldiers. But it could only take them so far. The question of debt, a familiar one to modern ears, had to be faced. In a landmark treatise, Morris’s “Report on Public Credit” called for the government’s need to raise revenue to fully pay domestic and foreign creditors and praised the utility of taxation in achieving this. In discussing issues like federal taxation (and by extension the power to do so) Morris in his report laid the fault lines which would divide the Founders and in some ways modern America.

Morris’ one great hope to keep the Confederation Government afloat required an amendment to the Articles of Confederation that would allow the Congress to levy an impost (custom duty), therefore providing a direct source of revenue to the National government and decreasing its dependency on the often requested, rarely delivered payments from the state governments. Morris came very close to achieving his grand reform; twelve of the thirteen states gave their ascent before the Articles’ fatal weakness reared its head. Unanimity was needed in order to change the charter, and tiny Rhode Island thumbed its nose at the rest of the Continent:

The decision in Rhode Island led to a dramatic erosion of public confidence in the Central government… [In states] public creditors immediately pressed their state legislatures to step in and assume the financial obligation of congress, if necessary by diverting tax revenues from Congress directly to the creditors…It appeared that… the new American republic was splitting asunder.

In the wake of this failure Morris declared he would resign unless Congress could “make permanent Provision for the public Debts, OF EVERY Kind.” If they could not he, “must therefore quit a situation which becomes utterly insupportable.” They could not.

By 1785 Morris was again out of public service, the states had once more begun printing their own currencies, more than a few began to levy import duties against neighboring states, and regional tensions were on the rise. Congress was a spent, broken institution that rarely managed to muster a quorum, though it did manage that year to suspend payments of interest on the debts owed to France.

Fortunately, 1785 also began the slow process that would culminate in the Constitutional Convention of 1787. Morris attended the Convention as a member of the Pennsylvania delegation. Beyond nominating Washington to preside as President, he participated little, allowing his protégé (the unrelated) Gouverneur Morris to speak at will. In the end, he affixed his name to the new constitution, becoming one of two people, along with Roger Sherman, to sign the Declaration of Independence, the Articles of Confederation, and the Constitution.

The last public office Morris held was that of United States Senator, serving as one of Pennsylvania’s original two. This should have been the crown of a long, arduous and unglamorous career in public service. But Robert Morris’s story does not have a happy end. His later years devolved into a dark tale about the incessant pursuit of wealth.

In “his sixtieth year, an age when many of his peers had retired to their country estates,” Rappleye believes, “Morris was operating out of fear.” The French Revolution’s wars had caused a liquidity crisis when the Bank of England suspended payments of hard currency on its paper obligations. Rappleye identifies at least one bank’s failure that cost Morris £124,000 sterling. As other investments went belly up and previously reliable profits in emergent markets shrank, Morris tried to make up the difference by throwing in with two shady partners and proceeded to speculate in land:

These three ambition speculators plunged into huge new commitments in the West and South – hundreds of thousands of acres in Pennsylvania and Kentucky, a million acres in Virginia and in the Carolinas, and more than two million acres in Georgia… Much of the land they had never seen, and many of the titles they obtained were suspect or contested but…These lands were not bought for settlement, but for quick resale…
At the scale they were buying, the debts mounted rapidly, but always on credit, and with the prospect of fabulous sales just over the horizon.

It was America’s first real estate bubble and some of Robert Morris’s friends, including Gouverneur Morris and George Washington, urged him to get out of the game. But it was too late. By 1797, his credit vastly over-extended, constantly harassed by creditors wanting payment, Morris was hiding out in his country estate. Eventually he returned to Philadelphia, where the Sheriff arrested him and brought him to debtor’s prison.

In his final analysis Rappleye writes:

What failed Morris in the end was overconfidence. He exceeded his credit… His great operation for the government he had always supported on the strength of his personal credit; his tragic error was to actually conflate his credit and that of the government…His trajectory follows that of Icarus, but in the place of the sun, Morris was dazzled by gold. He felt he had mastered the arts of finance, and as a matter of state policy, he may have. But the lucre became his personal obsession, it consumed him, and the higher he flew, he more he shed the plumage of strict principle and personal integrity that had first carried him aloft. He abused his credit, betrayed his reputation and forfeited all that he had achieved.

Rappleye goes onto say the downfall of Robert Morris makes for easy moralizing and to an extent he’s correct. But while hubris may have been the immediate cause of Morris’s downfall, he was not soullessly evil – Rappleye’s assessment blames the victim while it excuses the system. Time and time again in the history of the United States unregulated capitalism has led the nation to periods of rapid but chaotic expansion, created staggering wealth and crushing inequality, led to international folly and wars, caused countless bubbles and panics and on at least two occasions has brought it to the brink of catastrophe, where stand today.

But through it all apologists like Rappleye insist on treating capitalism as a sort of deity, refusing to attribute any evils to it whatsoever, placing the blame exclusively to the wickedness of man. It would be interesting to see the state of America’s drug war if narcotics were viewed in the same light. Because after a fashion, the practice of capitalism mimics the use of methamphetamines: in instances they can increase concentration and energy, even enhance one’s self esteem and high doses can cause euphoria. But the downside is they carry the potential for addiction and abuse because the dopamine rush of the game alters the brain’s psychological reward system, making the world away from them seem dull. And like narcotics, the fact that one person avoids addiction while another falls prey to it does not mean the drug is safe and the addict weak- it means the person in the first instance was lucky. Looking at it in this way it seems that after a life time of abuse, Robert Morris was an addict and potentially could have been better served by a stint in rehab than a stint in prison.

Such differences of interpretation notwithstanding, I applaud Rappleye’s efforts in reintroducing an indispensable founding father who might have otherwise lingered in obscurity. In addition to the comparable economic distress of then and now, the book’s timeliness and worth is only enhanced in the light of the United States’ modern hyper-partisan political culture, where the outliers drive the debate. Rappleye’s choice to chronicle the life of an arch-moderate whose adroit administrative abilities fulfilled the practical needs of the Revolution when highfalutin rhetoric or philosophical sophisms wouldn’t have cut it, smacks of perfect pitch. Robert Morris stands as a tribute to the man who did more to secure the successful outcome of the American Revolution than anyone except Washington and even then, as the civil and military sides of the same coin, it’s at best a tie.

____
Thomas J. Daly is a frequent Open Letters contributor living in Boston.

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