Even if we restrict our focus to finance, and restrict finance to the stock market, one would never know from this sunnyside-up imagery that tickers record busts as well as booms, that Wall Street has been regularly swept by financial panics, that the American economy has repeatedly crumpled into recession or depression. As there's no down side to finance capitalism, there's no need to saddle the Man Who Made Modern America with any responsibility for such debacles. Had the exhibit chosen to glance at the real historical record, however, it might have related to visitors the fascinating drama of the first stock market crash in American history, and the Hero's role therein.

Hamilton believed that "those who are most commonly creditors of a nation, are, generally speaking, enlightened men." They would, he was sure, invest their government-bestowed capital in enhancing the country's commercial and manufacturing base, thus allowing the US to compete with Great Britain in the global arena. Instead they plunged into an orgy of new speculation and market manipulation.

In February 1791, at Hamilton's urging, Congress authorized creation of a Bank of the United States, to be capitalized at ten million dollars, with the government putting up one fifth, and the remainder to be raised by a sale of stock beginning in July. B.U.S. subscription shares sold out instantly, and were as quickly resold, with eager buyers, visions of future profits dancing in their heads, bidding up the value of a barely existent bank from $25 to $60 almost overnight, from $60 to $100 in two days, from $100 to $150 in a single day. By the end of October shares were at $170 and a number of Hamilton's associates had acquired big stakes in the B.U.S. as well as seats on its board.

At the center of the frenzy, once again, was William Duer, the Darth Vader of early American finance. (Though still in close touch with Hamilton, he was no longer at the Treasury: "I have left to do better," he explained). At the end of December 1791, Duer mobilized a small group of New York speculators - among them one John Pintard, who later would found the New-York Historical Society - to rig the market by making massive purchases of bank stocks (and government paper), driving up their value by various machinations, then unloading their holdings at tremendous profit.

Borrowing (and embezzling) vast sums to finance their manipulations, the co-conspirators inflated a speculative bubble that sucked in many ordinary citizens. Hamilton, though personally incorruptible, had been stoking the fever as good for business, but now he grew alarmed. "These extravagant sallies of speculation," he wrote in January 1792, "do injury to the government and to the whole system of public credit, by disgusting all sober citizens, and giving a wild air to every thing." Far from making sober long term investments, his "enlightened" men seemed gripped by an irrational exuberance. Robert R. Livingston noted that in New York City "hundreds have made fortunes by speculating in the funds ... and have no idea of a more perfect government than that which enriches them in six months."

Early in March, stock prices leveled off, then declined slightly. Coincidentally, the government notified Duer of a $250,000 discrepancy in his accounts as Assistant Treasury Secretary. No longer able to raise cash, Duer began to sell. On March 10, as panic engulfed New York, he stopped payment on all his debts; two weeks later he was arrested and thrown in debtor's prison, one step ahead of a crowd seeking to disembowel him. (One creditor got into the prison, confronted Duer with a brace of dueling pistols, demanded he pay immediately or defend his honor, and left only after Duer forked over what he owed.) Pintard escaped his creditors by fleeing town.

The panic touched off a wider economic crisis. Many leading merchants were ruined; many ordinary citizens lost their life savings; business languished; unemployment spread. "The credit and fate of the nation seem to hang on the desperate throws and plunges of gambling scoundrels," wrote Jefferson, who calculated that losses exceeded the combined value of all Manhattan's real estate.

Hamilton hadn't counted on this. As Chernow notes, "the financial turmoil on Wall Street and the William Duer debacle pointed up a glaring defect in Hamilton's political theory: the rich could put their own interests above the national interest." Worried "about abuses committed against the rich," Hamilton had minimized "the skulduggery that might be committed by the rich." He acknowledged to a worried Washington that speculation "may be attended with pernicious effects," that it "fosters a spirit of gambling, and diverts a certain number of individuals from other pursuits." Still, he was not prepared to accept Jefferson's judgment that it constituted a "canker at the heart of the Hamilton enterprise". Loathing idle capital, he insisted it should be possible to draw "a line of separation between honest men and knaves" - "between respectable stockholders and mere unprincipled gamblers"-by relying on the power of "public infamy."

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