Read American History Revised for Free Online

make a difference. Such a man was Haym Salomon. Arriving in the early 1770s from Poland, Salomon established himself as a brilliant financier and personal friend of George Washington. Captured and sentenced to death by the British in 1776, Salomon used his mastery of eight languages to persuade his Hessian jailer to let him escape to the American side. During the Revolution, he went to Paris and, passing himself off as a French diplomat, raised $3.5 million for America from major merchant banking houses. He negotiated additional subsidies from thegovernments of France, Holland, and Spain, all based on his personal credit. He also acted as paymaster-general of the French military forces in America and, when funds ran out, advanced his own money to keep the soldiers on duty.
    In 1781, Congress established the Office of Finance to save the United States from fiscal ruin. The new nation had a fundamental problem, an inherent contradiction that threatened its very philosophical basis for being: taxation. “The congressmen feel they can’t tax the states,” observed Salomon, “when taxation is precisely what we all took up arms to oppose.” Until the new government straightened out its relationship with the states, the only way it could pay its bills was to borrow. But it had already borrowed up to the hilt. A new nation already saddled with debt is not an appealing credit risk. No matter, Salomon again went to work. He provided low-interest funds to members of the Continental Congress who were on their last legs. Admitted James Madison, “I have for some time … been a pensioner on the favor of Haym Salomon.” Most significant of all, Salomon provided a $700,000 loan to the Continental Government, secured by a government promissory note dated March 27, 1782. When Salomon died three years later, his estate still had the bulk of the loan unpaid.
    It still does. The note was denominated in depreciating government currency, and Salomon died impoverished. The American government was a deadbeat.
    The only admission of the debt owed to Salomon occurred nearly two hundred years later, in the form of a postage stamp. In 1975 the U.S. Postal Service issued a commemorative stamp that read on the back side: “Haym Salomon was responsible for raising most of the money needed to finance the American Revolution and later to save the new nation from collapse.” It is probably fair to say that most people never read it before licking the stamp.

    In April 1813, at the height of the War of 1812 against Britain, the United States again was in dire straits. This time, unlike in the American Revolution, the United States did not have France to bail it out.
    The brilliant secretary of the treasury, Albert Gallatin (treasury secretary under two presidents for thirteen years—a record that still stands), developed a plan to raise $16 million. He secured tentative subscriptions of $5.8 million from the public and $2.1 million from a small group led by John Jacob Astor, the second-richest man in America. Total to date: $7.9 million. Still to go: $8.1 million. Gallatin had only seven days left before the closing date. If he did not raise the balance by then, the offering would fail and the money held in escrow would have to be returned.
    Where to go for the $8.1 million?
    The only hope was Stephen Girard, the richest man in America. Girard had arrivedin Philadelphia as a young French sea captain at age twenty-one and made his fortune in mercantile trading and banking. But there was a slight problem—in fact a very big problem. A year earlier, Girard had turned down the United States Treasury’s request for a $500,000 loan because it refused to help him get a charter in his fight with other Philadelphia banks trying to keep him out of the banking business. Since then, the U.S. had upset Girard even further by filing a lawsuit claiming one of Girard’s ships had brought British goods into an American port illegally—even though this ship had