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American Moguls: Robert Morris

Robert Morris

1734-1806

Did Morris bankroll the Revolution, or did the Revolution bankroll him?

Born the (probably illegitimate) son of a shipping agent in Liverpool, England, he was raised by his maternal grandmother. His father immigrated to Oxford, Maryland, where he prospered in the tobacco trade. He sent for Robert to join him in 1749. Robert attended school for a year and told his father the instructor had nothing more to teach him. His father arranged an apprenticeship for him in Philadelphia with a shipping firm. Shortly thereafter, his father died in a freak accident involving a fly and a canon during a drunken celebration on one of his ships.

Robert thrived in his position in Philadelphia, and after his seven-year apprenticeship was complete, he quickly became a partner in the firm in 1757. He was a hard-drinking carouser at night, fathering at least one illegitimate child, but during the day, he was a hard-working, innovative businessman. The shipping firm traded with the Caribbean, Europe, India, and Africa (including several ventures in the slave trade) and grew to be one of the most prosperous in the colonies.

He was a capitalist even before Adam Smith coined the term. He was opposed to tariffs, taxation, and government interference in business. Morris focused on self-interest and business and believed to do otherwise was naive. By 1775 he was the wealthiest man in the American colonies.

When Britain began increasing taxation on the colonies, he became a leader in the resistance and the boycotting of British goods. As a representative to the 2nd Continental Congress, he used his shipping expertise and arranged for gunpowder and other supplies to be smuggled to the colonies. But he argued for reconciliation with the British, as he pragmatically did not think the poorly armed colonies could defeat the world’s greatest empire. While he did not support the Declaration of Independence, he endorsed and signed it once it was passed, stating, “I am not one of those politicians that run testy when my own plans are not adopted. I think it is the duty of a good citizen to follow when he cannot lead.”

Morris used his extensive knowledge of shipping to set up a trading system that exchanged colony goods for war goods. When the British attacked his ships, he commissioned and outfitted privateers to attack the British ships. Rampant inflation swept the war-poor colonies, and Morris supported price controls to halt the economic plunge. Mobs rose against the controls, forcing him to go into hiding, where the Continental army rescued him. The financial crisis continued, with some states refusing to support the war effort. The army fell into desperate straits lacking clothing, food, and wages. Ten army regiments demanded better conditions, and some threatened to mutiny.

In 1781 with the financial situation at a near breaking point, the Continental Congress realized it did not have the skills to prevent the rapidly approaching disaster. Morris was appointed the Superintendent of Finance with near total control (and no oversight) of the fledgling country’s finances. He established a private bank of wealthy investors to help finance the war. Morris created a new currency backed by his fortune that came to be known as “Morris notes.” With his unchecked power, he became the master of backroom dealings, where he was the government official and sometimes the defense contractor with no bids.

All in all, he stabilized the government enough for it to survive. Still, there was a crisis with the unpaid soldiers who nearly rose against the government. Washington managed to calm the ferment with promises of imminent money for them.

In 1783, when the peace agreement was signed with Britain, the new United States had a staggering 42 million dollar debt. The army was disbanded, but again protests and violence broke out to try to procure back wages that had never been paid.

George Washington offered Morris the Secretary of the Treasury job when the new constitutional government was being formed. Morris turned the position down and recommended conservative Alexander Hamilton for the job. Morris instead accepted a U.S. Senate seat from the state of Pennsylvania. He was not welcomed with open arms. A group of Senators accused him of war profiteering, and the first, but certainly not the last, Senate inquiry was opened. The inquiry was never completed, and a short report was drawn up that found Morris not guilty, although it was evident that he had profited from his position.

Morris left the Senate and returned to his business interests, and he did so with a passion and a vast fortune. He built a factory town, started two canal ventures, and launched silkworm and maple sugar operations. He also started building an enormous mansion for himself in Philadelphia that was to encompass a complete city block made of red brick lined with marble. His largest endeavor was in land purchases. He purchased one million acres in Pennsylvania and six million acres in the South, primarily land taken from the Indians. He was the largest landowner America has ever had. Morris was convinced that there would be a land rush in America by immigrants ready to be part of the new country, and he would make a colossal fortune by quickly selling the land. He was wrong. Instead, Morris had created an enormous real estate bubble that burst with the post-war recession and instabilities in Europe, including the French Revolution.

Morris had not only invested his fortune but also borrowed heavily. When his creditors closed in, he owed an enormous three million dollars. He retreated to his country estate but could not avoid them. He lost all his properties, his furniture was sold at auction, his incomplete mansion was stripped of its marble, and Morris was sent to debtor’s prison for three and a half years. A friend arranged a $1,500 (about $24,000 today) annual annuity for Morris’ wife, and she rented a small house where they lived.

Morris’ financial savvy, and Benjamin Franklin’s adroit diplomacy that gained French support for the war, saved the Revolution. He was one of the most important of the Founding Fathers, and he was almost entirely abandoned and shunned by those same “Fathers.”

When he died in that little rented house in 1806, he received a five-line obituary in the newspaper. There were no memorials, ceremonies, or recognition. He was simply buried in the church graveyard, and the shunning of Morris continues to this day.

It could be said that Morris rose as a capitalist, fell as a capitalist, and in the capitalist tradition, no one picked him up from that fall.

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