After bank shares attained giddy levels in January 1792, they began to slide, creating a crisis for Duer, who had borrowed scandalously large amounts from New York creditors. “Widows, orphans, merchants, mechanics, etc. are all concerned in the notes,” Hamilton’s friend Robert Troup informed him.20 By March 9, with bank shares plunging, Duer stopped payment to creditors, with catastrophic repercussions. Two dozen financiers went bankrupt the next day, and Duer was packed off to debtors’ prison, as much to protect him from angry mobs as to punish him. Feeling grimly vindicated, Jefferson gloated over the mayhem, writing that “the credit and fate of the nation seem to hang on the desperate throws and plunges of gambling scoundrels.”21 Hamilton again restored order to the market by purchasing government securities, but the damage to his reputation had been done, especially when it surfaced that William Duer had raided the SEUM coffers for speculative funds. In the National Gazette Freneau seized this chance to revile the Hamiltonian system, which he blamed for “scenes of speculation calculated to aggrandize the few and the wealthy, while oppressing the great body of the people.”22 In this situation, neutrality was not an option for Washington, who would be forced to choose sides between Hamilton and Jefferson.

ALTHOUGH WASHINGTON had originally planned to resign during his first term, many Americans could not imagine another president and automatically assumed he would stay in office indefinitely. Whatever their quibbles about his policies, citizens still honored his exalted character and place in history. As Lund Washington wrote from Virginia, “No person has an idea but that you must remain at the head of the government so long as you live.”23 It wasn’t the first time Washington became the captive of a position from which he could not extricate himself. Once again, as the indispensable man in a crisis, he was held hostage to events. Further signs of aging were visible in the craggy face, the whitening hair, the slightly stooped gait.

On February 21, 1792, the eve of his sixtieth birthday, Philadelphians toasted him with an exuberant celebration, throwing a fancy ball in his honor and draping huge transparencies over buildings inscribed with the words “Vive Le Président.” Amid the growing strife in American politics, the public was gripped by a pervasive fear that Washington might serve only one term. Tobias Lear articulated the widespread sentiment: “I fear more from the election of another president, whenever our present great and good one quits his political or natural career, than from any other event.”24 Protective of her husband and well aware of the grave medical problems that punctuated his first term, Martha Washington hoped he would decline a second.

In this increasingly dark, conspiratorial atmosphere, Washington received three malicious letters, warning him anonymously of the secret presidential ambitions of Jefferson and of Madison’s treachery: “When you ask the opinion of the S[ecretary] of S [tate], he affects great humility and says he is not a judge of military matters. Behind your back, he reviles with the greatest asperity your military measures and ridicules the idea of employing any regular troops . . . His doctrines are strongly supported by his cunning little friend Madison.”25 In another letter, the poison-pen artist made sure Washington knew of the intrigue behind Freneau’s hiring at the State Department: “I do not believe you know that the National Gazette was established under the immediate patronage of Mr. Jefferson and Mr. Madison, and that Mr. Freneau, the printer of it, is a clerk in the Secretary of State’s office with a salary as interpreter.”26 The object of these men, the author averred, was to make Washington “odious” and “destroy Mr. Hamilton.”27

At this point Washington sloughed off suspicions about Jefferson, as evidenced by two remarkable meetings they held in February 1792. At the first, Jefferson lobbied to make the postal service part of the State Department rather than Treasury, hoping that would choke the excessive growth of Hamilton’s department. In passing, Jefferson mentioned that if Washington ever retired, he would too. This comment reverberated in Washington’s mind overnight, and at breakfast the next morning, he launched into a frank discussion of his political future. He noted to Jefferson that he had agreed reluctantly to attend the Constitutional Convention and serve as first president. But now,

were he to continue longer, it might give room to say that, having tasted the sweets of office, he could not do without them; that he really felt himself growing old, his bodily health less firm, his memory, always bad, becoming worse; and perhaps the other faculties of his mind showing a decay to others of which he was insensible himself; that this apprehension particularly oppressed him; that he found moreover his activity lessened, business therefore more irksome, and tranquillity and retirement become an irresistible passion. That however he felt himself obliged for these reasons to retire from the government, yet he should consider it as unfortunate if that should bring on the retirement of the great officers of the government and that this might produce a shock on the public mind of dangerous consequence.28

This remarkable burst of candor, as recounted by Jefferson, showed that Washington still trusted the secretary of state. In a private memorandum on the talk, Jefferson disclosed that he himself was “heartily tired” of his job and stayed only from a sense that Hamilton would linger for several years.29 Later Jefferson wrote how much he had hated doing battle with Hamilton in the cabinet, descending “daily into the arena like a gladiator to suffer martyrdom in every conflict.”30 When Washington made plain that he could not contemplate retirement because of “symptoms of dissatisfaction” toward the administration, Jefferson made bold to say that there was only a single source of discontent, the Treasury Department, and “that a system had there been contrived for deluging the states with paper money instead of gold and silver, for withdrawing our citizens from the pursuits of commerce, manufactures, buildings, and other branches of useful industry to occupy themselves and their capitals in a species of gambling.”31 Throwing caution to the wind, Jefferson said Hamilton had suborned congressmen who “feathered their nests with [government] paper” and therefore voted for his system.32 Hamilton’s Report on Manufactures, Jefferson claimed, would destroy any pretense of limited government and enable the government to undertake any measure it liked. Washington must have been shocked as he fathomed the depth of animosity between his two most talented lieutenants. At the same time Madison was slashing away anonymously at Hamilton in the National Gazette, inveighing against “a government operated by corrupt influence, substituting the motive of private interest in place of public duty.”33

What made the rising tide of criticism more troublesome for Washington was that much of it originated from Virginia, where he was increasingly regarded as an apostate. Edward Thornton, secretary to the British minister, observed in April 1792 that Washington “has very few who are on terms of intimate and unreserved friendship” with him and “what is worse, he is less beloved in his own state than in any part of the United States.”34 Three years later Washington told Edmund Randolph that, if the Union were to break up into North and South, “he had made up his mind to remove and be of the northern.”35 That Washington now identified with northern finance, commerce, and even abolitionism would have major consequences for American history. Had he sided with Jefferson and Madison, it might have deepened irrevocably the cleavage between North and South and opened an unbridgeable chasm seventy years before the Civil War.