BOOK REVIEW: Follow the money

OPINION:

ROBERT MORRIS: FINANCIER OF THE AMERICAN REVOLUTION
By Charles Rappleye
Simon & Schuster, $30, 576 pages, illustrated

This may not be the optimal time to publish this book. For one thing, it is about a praiseworthy banker - our nation’s first banker, if you will. The book is a lengthy one by today’s shortened-attention-span standards. And then too, prizewinning journalist-historian Charles Rappleye writes in a discursive style that contrasts with the current run of rip-and-read narrative authors.

So this book is no page turner; it offers, instead, pages to savor, packed with new research and an overall new look at our founding history that is long overdue. What Mr. Rappleye reveals to us is a historical truth that is as important today as it was during our perilous struggle for independence. That lesson is: You cannot have a stable society or a functioning government that fosters liberty unless you have a sound financial foundation supporting them.

As this book clearly shows, Robert Morris, not Alexander Hamilton, is the real father of the American financial system that made the suddenly liberated economy of the new United States something of a marvel to the rest of the world. There are several reasons Morris has never received his due as a Founding Father, and Mr. Rappleye cites the normally recognized ones - the mystery of financial matters for most people and the fact that Morris’ personality often led him to clash with other, more visible leaders of the Patriot cause.

However, the real clash was more about the idealized picture of the new nation-to-be. Many of the more radical Founders (Samuel Adams, to name one) had a truly naive vision of America as a land of sturdy yeoman farmers, skilled mechanics and respectable craftsmen trading honestly among one another with no need for the tyranny of bankers or even of merchant traders. We were to be a nation of regions, with each section working in cooperation to provide its special crops and products for the benefit of all.

In other words, utter nonsense. In a very real sense, many of our Founders considered their home states to be the true sovereign nations and the idea of a “United States of America” to be something amorphous and convenient, but not controlling - a European Union type of creature.

Not surprisingly, it was men who had experience in the wider world of trade, such as Benjamin Franklin and Hamilton, whose outlook by necessity was global rather than regional, who saw the need for a truly national economy based on a national currency and a national financial structure. Chief among them was Robert Morris.

As Mr. Rappleye recounts, Morris was born in Britain, but his father had moved to the bustling port of Oxford, Md., and prospered as what was called a factor, a broker who traded in tobacco that he warehoused and then shipped to Mother England at a profit. By the time he was 13, young Robert was brought to Oxford for a brief stint of education and then apprenticed as a clerk to a thriving merchant broker in Philadelphia, in those days on its way to becoming the second-largest city in the British Empire, after London.

By the time the Revolution appeared inevitable, Morris had become one of the merchant princes of the American Colonies - acquainted with and sometimes in business with others, including John Hancock of Boston and the Browns and Alsops of Rhode Island. But as the other Founders gravitated to Philadelphia to consider what a war for independence would entail, it was men like Morris and Franklin who took a central role in the big question: Where would the wherewithal of war come from?

Because of the restrictive trade rules imposed by the British government, the would-be rebels had to confront the stark realities that they needed to buy what they had been forbidden to make - steel and gunpowder in the form of cannons and muskets, and uniforms - and that meant buying them from France, which meant borrowing the money to do so from the French. So our War for Independence began less as a fight at a “rude bridge that arched the flood,” as Ralph Waldo Emerson put it, and more as a struggle over high finance.

It fell to Morris to cajole the Congress to persuade the suspicious new state governments to commit to providing general funds for the war for the use of a national government. He also created what was largely a Ponzi scheme of debt certificates that stretched what gold and silver hard currency there was on hand to pay domestic suppliers for the always straitened Continental Army.

Once Franklin was operating in Paris, he and Morris embarked on what can only be called a shell game of promising payments to the French that were conditioned on the French lending an even greater sum of new money. Along the way, Morris became the father of the U.S. Navy by converting merchant shipping into the instant warships and privateers that so effectively checkmated Britain’s supply armada.

Even after the war was won, the new nation’s finances can only be described as a combination of blue smoke and mirrors, as some states lagged behind in paying their arrears to the point that a general mutiny of disgruntled (and unpaid) Continental Army regiments threatened the very existence of the government.

Creating a truly national economy - by establishing a national debt - would be credited to Hamilton in the years to come. By that time, Morris had reaped his long-predicted reward: the calumny and spiteful revenge of those other Founding Fathers who neither understood nor supported the financial miracle he had wrought for the new nation.

There are important lessons to be learned from this well-written and thoroughly researched back story about what really made America free.

James Srodes’ next book, “The Dupont Circle Set,” will be published in 2011.