The Commercial Republic

America’s Immigrant Founders and the Economy They Built

By the time the blood had dried on the fields of Yorktown, the American economy was in ruins. The fledgling nation was essentially bankrupt with a war debt of $160 million in 1780 dollars—nearly $4 billion today. While Washington’s bedraggled troops roamed the countryside barefoot, the Continental Congress’s printing presses had issued some $241.5 million in paper money, which had lost 98% of its value by war’s end. The government under the Articles of Confederation had no power to raise taxes. Gold and silver had flowed out of circulation. The country had zero banks. As interest payments on the debt grew faster than the cash-strapped government could pay for them, the country sank into a deep recession. The United States had won the war, but could it survive the peace?

The men tasked with saving the young republic were not New England lawyers or Virginian planters, but immigrant orphans. Robert Morris, Alexander Hamilton, and Albert Gallatin arrived on America’s colonial shores with ambition and an uncommon facility with finance. In rescuing the republic from financial collapse, they would leave a far deeper mark on the American experiment than they—or anyone else—could have imagined.

It could not have been more different from what the Founding Fathers intended.

The American Revolution was led by the land-owning colonial elite, and land shaped how they imagined the republic they were building. Planters like Thomas Jefferson believed that “governments will remain virtuous for many centuries; as long as [the people] are chiefly agricultural”—cities, he believed, bred corruption and dependence. It was a vision rooted in what the founders knew: in a world where banks were illegal and wealth was measured in acres, capital was an abstraction. The immigrant financiers understood something different. Having been uprooted from their homelands and immersed in Atlantic trade, they knew that capital was “movable, portable, migratory in the same sense that they themselves were.”¹

If they were rootless, money was, too.

Raised in the bustling trading world of Liverpool before immigrating to Philadelphia, Robert Morris built a global merchant network and learned to speak the language of British pounds, French livres, Dutch florins, and Spanish reales. In December 1776, as British troops closed on Philadelphia and Congress fled to Baltimore, Morris—who in signing the Declaration of Independence signed a potential death warrant if captured—stayed behind to keep the government functioning. It was Morris who supplied Washington with the financial backing that made the victory at Trenton possible, and who repeatedly drew upon his own reputation and personal credit to keep the nascent government afloat. Appointed Superintendent of Finance in 1781, he persuaded Congress to charter the Bank of North America, the nation’s first bank, in a desperate effort to stabilize a currency that had nearly collapsed. It was not a permanent solution—only a stronger federal government could solve that problem—but Morris bought the republic enough time to survive until the Constitutional Convention of 1787.²

Morris turned down the opportunity to be the nation’s first Treasury Secretary under the new constitution, ceding the position and the responsibility for building the nation’s financial architecture to Alexander Hamilton. Trained in a trading house on St. Croix, Hamilton was constitutionally unsuited to the compromises politics required, and yet he understood something no other founder grasped as clearly: that the republic’s survival depended on its creditworthiness. By assuming the states’ debts into a single federal obligation—what he called both “the price of liberty” and “a powerful cement of union”—he bound the financial interests of creditors to the success of the national government. The resulting securities market gave investors a stake in the republic’s future. Hamilton then established the Bank of the United States, whose provisions for limited liability became the model for the state-chartered banks and corporations that followed. During the entire colonial period, only eight for-profit corporations had been chartered. During the 1790s alone, more than three hundred appeared, and by 1837, there were more than 600 banks in operation across the nation. The institutions he built outlasted the enemies he made.³

The so-called Revolution of 1800 brought Jefferson and the Republicans to power, and Albert Gallatin to the Treasury. As a nineteen-year-old Gallatin had left his native Switzerland in search of opportunity in the colonies. After trying and failing at land speculation, manufacturing, and agriculture, he went into politics and became an expert in finance. Having opposed Hamilton’s agenda as a state legislator and then as a congressman, Gallatin spent much of his tenure as Treasury Secretary protecting Hamilton’s financial architecture from an administration that was ideologically committed to dismantling it. While working to reduce the national debt and internal taxation, he also financed the Louisiana Purchase and westward expansion of the country. Where Hamilton had built the system, Gallatin understood what it meant: “no law exists here, directly or indirectly, confining man to particular occupation or place,” he wrote—for in “every species of trade, commerce, art, profession and manufacture,” opportunity remained open to all comers. The absence of the old constraints was itself the achievement.⁴

Together, Morris, Hamilton, and Gallatin did more than rescue the republic from insolvency—they built the financial architecture that transformed political liberty into economic reality, directing capital toward productive enterprise across the land.

The social landscape was shifting beneath their feet.

The United States that emerged after the Revolution initially looked, at least on the surface, much like the agrarian colonial society it had always been. Most Americans still lived on farms, and towns remained small—in 1800, only 33 towns had a population of 2,500 or more, and only 5 percent of Americans lived in cities—and industrialization lagged well behind England. Yet beneath that familiar landscape, as Gordon S. Wood argues, a profound social revolution was already taking place. By the early 1800s, America had become, seemingly overnight, “perhaps the most thoroughly commercialized nation in the world.”⁵

Commerce no longer described merely trade among nations. It came to define the everyday exchanges of ordinary Americans in an expanding national marketplace. Freed to pursue opportunity, Americans threw themselves into “enterprise,” “improvement,” and “energy.” As one Columbia professor lamented in 1800, “From one end of the continent to the other, the universal roar is Commerce!”⁶

This was the deeper consequence of the Revolution. In breaking the chains that had bound the colonies to the King, the Founders had swept away an inherited political order. The immigrant financiers had supplied the institutions that allowed a new commercial order to emerge in its place. Human relationships were increasingly defined not by sovereign and subject, priest and parishioner, lord and serf, master and slave, but by voluntary association and exchange under the rule of law. In this commercial republic, distinctions between gentlemen and commoners began to blur as success increasingly depended on individual merit and achievement more than birth, title, or family name. While the British aristocracy continued to sneer at work, it became honorable in America. Leisure became suspect, and “nearly every adult white male became a gentleman.” The aristocratic hierarchy of the Old World had, in Tocqueville’s words, “melted into a middle class.” Social mobility had become the hallmark of American life.⁷

Jefferson had imagined an agrarian republic of independent farmers, yet he never confronted the paradox that land itself had long been the foundation of inherited hierarchy. For centuries, serfs, indentured servants, and slaves had all been bound to the soil, including at Jefferson’s own Monticello. Commerce, instead, became the “golden chains” that allowed an unshackled society to cohere.⁸ Not for everyone—at least not yet—but for millions of men regardless of station or origin, the commercial republic was the mechanism by which Jefferson’s promise “that all men are created equal” became something more than an idea.

That was the American Revolution.

Perhaps ironically, those Founding Fathers who lived into the early 1800s came to regard this new society with unease, fear, and disillusionment. Benjamin Rush looked at the America of 1812 and saw “a bebanked, a bewhiskied, and a bedollared nation.” Jefferson believed American society was going backward—the people were more religious, more sectarian, and less rational than they had been at the time of the Revolution.⁹ History, meanwhile, has not always looked kindly on the men who built this new republic. Robert Morris made some poor investments in the 1790s, ending up in debtors’ prison, abandoned by friends and allies only to die in penury and obscurity. Alexander Hamilton was driven out of politics and to an early grave by Aaron Burr’s bullet. Albert Gallatin alone enjoyed a long and distinguished afterlife, becoming a diplomat, businessman, and, among much else, founder of New York University.

John Adams variously described Hamilton as “the bastard Brat of a Scots pedlar,” “a foreigner,” and “not really an American.”¹⁰ He might have said the same of the commercial republic that Hamilton and the other immigrant financiers built. Yet that system would come to be seen as the bedrock of the young republic’s economy—eventually recognized the world over as quintessentially American.

Today, Hamilton and Gallatin rest in the shallow soil of the graveyard beneath Trinity Church in Lower Manhattan, while skyscrapers rise from the bedrock around them. The graveyard sits at the top of Wall Street—long the symbol of American finance—at its intersection with Broadway, long the symbol of America’s vibrant, gaudy, commercial culture. They sleep at the crossroads of the commercial republic they helped to build, while just a few miles away, the Mother of Exiles continues to welcome the rootless strivers who, like them, arrive in search of opportunity.

Happy Independence Day!

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1. Thomas K. McCraw, The Founders and Finance: How Hamilton, Gallatin, and Other Immigrants Forged a New Economy (Harvard University Press, 2012).

2. Charles Rappleye, Robert Morris: Financier of the American Revolution (Simon & Schuster, 2010).

3. McCraw, The Founders and Finance.

4. Ibid.

5. Gordon S. Wood, The Radicalism of the American Revolution (Knopf, 1992).

6. Ibid.

7. Ibid.

8. Ibid.

9. McCraw, The Founders and Finance.

10. Ibid.