finances of the Revolution were in such a desperate condition that Sir Henry Clinton built his hopes of success—­now he had discovered that no victory gave him a permanent advantage—­upon the dissolution of the American army, possibly an internal war.  With depreciated bills in circulation amounting to one hundred and sixty millions of dollars, a public debt of nearly forty millions in foreign and domestic loans, the Congress had, in March, ordered a new emission of bills; the result had been a season of crazy speculation and the expiring gasp of public credit.  In addition to an unpaid army, assurances had been given to the French minister that not less than twenty-five thousand men should be ready for the next campaign; and how to force the States to recruit them, and how to pay them when in the field, was the present question between Headquarters and Congress.

From the time that Hamilton’s mind had turned to finance, in his nineteenth year, he had devoted the greater part of his leisure to the study and thought of it.  Books on the subject were few in those days; the science of political economy was unborn, so far as Hamilton was concerned, for Adam Smith’s “Wealth of Nations,” published in 1776, had not made its way to America.  He assimilated all the data there was to be found, then poured it into the crucible of his creative faculty, and gradually evolved the great scheme of finance which is the locomotive of the United States to-day.  During many long winter evenings he had talked his ideas over with Washington, and it was with the Chief’s full approval that he finally went to work on the letter embodying his scheme for the immediate relief of the country.  It was addressed to Robert Morris, the Financier of the Revolution.

The first part of the letter was an essay on inflated and depreciated currency, applied personally, the argument based on the three following points:  There having been no money in the country, Congress had been unable to avoid the issuance of paper money.  The only way to obtain and retire this immense amount of depreciated paper money was to obtain real money.  Real money could be obtained in one way only,—­by a foreign loan.  He then elaborately disposed of the proposed insane methods of applying this projected loan which were agitating the Congress.  But he was an architect and builder as well as an iconoclast, and having shown the futility of every financial idea ever conceived by Congress, he proceeded to the remedy.  His scheme, then as ever, was a National Bank, to be called The Bank of the United States; the capital to be a foreign loan of two millions sterling.

This letter, even in its details, in the knowledge of human nature it betrays, and in its scheme to combine public and private capital that the wealthy men of the country should, in their own interests, be compelled to support the government, reads like an easy example in arithmetic to-day; but a hundred and twenty years ago it was so bold and advanced that Morris dared to adopt several of its suggestions in part only, and founded the bank of Pennsylvania on the greater plan, by way of experiment.  No one but Hamilton could carry out his own theories.