Haym Salomon - Financial Hero

Source: Wikimedia Commons

The Fourth of July is a great holiday.

Summer is in full swing, most people have a nice long weekend off from work, families are together, and we get a chance to celebrate this great nation’s independence.

But, of course, freedom isn’t free. And while we often celebrate our Founding Fathers who crafted and signed the Declaration of Independence and the soldiers who fought and died to secure that independence, we too often forget a very important group of heroes who were able to make it all possible: the men and women who helped finance the Revolutionary War and our nascent government.

One such man was Haym Salomon.

From Lezno, Poland to New York City

Haym Salomon was born in Lezno, Poland in 1740 to an Ashkenazi Jewish family. At the time, many Jewish villages in Poland were decimated by pogroms – a crime or incident would occur, Jews in the area came under suspicion for it, and then mob violence resulted in widespread incidents of assault, murder, and property destruction.

When Lezno was threatened by one such pogrom, Haym was forced to flee to Holland.

Still only a young man, Haym traveled Europe throughout the 1760s, gaining fluency in several languages and learning finance and accounting along the way. By 1772, Haym found himself in England. From there he sailed to New York, which had been under British control since the 1660s. New York, a thriving colonial city with 14,000 inhabitants, was the center of commerce and shipping for much of North America.

Haym found work as a financial broker for merchants engaged in overseas trade. Eventually he started a brokerage company of his own and, through his personality and keen discernment, became very successful.

Rebel with a Cause

Haym soon learned that the colonies were in turmoil over the issue of taxation without representation. Although many of his clients were prominent loyalists, when fighting broke out in Lexington and Concord on April 19, 1775 Haym sided with the Patriot cause.

Salomon joined the New York branch of the Sons of Liberty – the secret society that orchestrated the Boston Tea Party in 1773 and included members like John and Samuel Adams, John Hancock, Patrick Henry, and Paul Revere.

Salomon was eventually arrested by the British and charged with spying in September 1776. He was sent to a maximum security prison and became seriously ill with a severe chest cold (possibly pneumonia).Haym Salomon

However, Haym noticed that the Hessian soldiers that were serving as guards did not speak English, and the British did not speak German. He let the British know he could speak German, without volunteering to be an interpreter as he did not want to be viewed as a British sympathizer. He was soon given the job and received better treatment, food and quarters. Salomon used his position to help prisoners of the British escape and encouraged over 500 Hessians to desert the war effort or to switch to the American side.

Unaware of Salomon’s other activities, the British paroled him. Haym continued to work underground for the rebel cause. However, two years later he was again arrested and, on August 11th, 1778, was convicted of several capitol charges, all relating to his activities as a spy (specifically, he was suspected to be planning a fire that would destroy the British royal fleet in the New York harbor). He was sentenced to be hanged by the neck until dead, the next morning. He was returned to his cell to await his fate.

Fortunately, Haym Salomon had planned on this eventuality and ingeniously had hidden some gold coins in his clothes. With them he bribed a guard, escaped and made his way to Philadelphia and safety.

Financing the Revolutionary War

At the time, the city of Philadelphia was the center of the independence movement and home to the Continental Congress, the legislative body of the thirteen colonies that had declared their autonomy from Britain in 1776. Salomon spoke before the Second Continental Congress, offering his services and requesting a position, but was turned down. With some borrowed funds, he opened an office as dealer of bills of exchange. His firm on Front Street, which was near the Coffee House where Colonial Army officers and members of the Continental Congress often gathered, began to flourish.

The revolutionary cause, in contrast, was in dire financial straits. The colonies were battling against an extremely wealthy enemy, the British Empire. Keeping the American forces supplied with arms, food, and other supplies, was a daunting task. Salomon came to know many leading figures in Philadelphia during this time, and brokered a loan of $400,000 (approximately $11.5mm today) that gave George Washington, head of the Continental Army, funds to pay his soldiers in 1779. It is thought that Salomon may have contributed his own funds to this aid package.

Salomon became an associate of prominent Philadelphian Robert Morris, a member of Congress with close ties to Benjamin Franklin. Morris brokered many financial transactions that helped the revolutionary cause gather steam early on. By the winter of 1780-1781 the colonial government was broke and Morris was appointed superintendent of finance. Salomon entered into more than seventy-five financial transactions with Morris between 1781 and 1784. He was almost the only broker for the sale of bills of exchange – bonds sold to provide funds for the war effort and salaries of top government officeholders. Salomon may have backed many of these with his own assets. Moreover, he was the principal broker for subsidies from France and Holland to help the American independence effort, and turned over his commissions on these transactions to the cause as well. He was also named an agent for merchandise that was seized by privateers loyal to the colonists, which he sold to help finance the war.

“Send for Haym Salomon.”

In August of 1781, our Southern forces had trapped Lieutenant General Charles Cornwallis in the little Virginia coastal town of Yorktown. George Washington and the main army and the Count de Rochambeau with his French army decided to march from the Hudson Highlands to Yorktown and deliver the final blow. But Washington’s war chest was completely empty, as was that of Congress. Without food, uniforms and supplies, Washington’s troops were close to mutiny. Washington determined that he needed at least $20,000 (approximately $600,000 today) to finance the campaign. When Morris told him there were no funds and no credit available, Washington gave him a simple but eloquent order: “Send for Haym Salomon”. Haym again came through, and the $20,000 was raised. Washington conducted the Yorktown campaign, which proved to be the final battle of the Revolution, thanks to Haym Salomon.

The Treaty of Paris was signed on September 3rd, 1783, ending the Revolutionary War, but the financial problems of the newly established country were not. It was Haym Salomon who managed, time-after-time, to raise the money to bailout the debt ridden government. Salomon even made loans – interest-free – to future presidents James Madison and James Monroe.

Death and Bankruptcy

The damage done to Salomon’s health during his imprisonment is believed to have led to his contracting tuberculosis. On January 6th, 1785, at age 44, he succumbed to the disease, leaving his wife, Rachael (Franks) Salomon, and four young children. He was buried in the Mikveh Israel Cemetery, Philadelphia. His estate showed that he owned approximately $354,000 of Continental securities, but inflation had reduced the value of this substantial amount owed him to a mere $44,732. Against this asset, he owed $45,292. Haym Salomon had died in bankruptcy.

In all, the sum that Salomon advanced to help the war cause was over $658,000 (approximately $20mm today), which was never repaid.

Prior to the adoption of the Constitution in 1789, Congress did not have the power to levee taxes, other than to collect duty on imported goods. The overwhelming debt owed by the fledgling nation far exceeded that of its meager income. Among the indebtedness obligating Congress was the need to provide pensions for those officers and soldiers who had been wounded while serving in the Continental Army. This was their first priority. Repaying vast sums to a few creditors like Salomon and Morris was outweighed by the number of disabled veterans desperately needing governmental support.

Haym’s children attempted, on several occasions, to recover the money owed, but they were always turned down. They even offered to accept a settlement of $100,000 – but Congress simply didn’t have the money.

In 1926, nearly a century-and-a-half after his death, Congress finally officially recognized the contribution to the American Revolution by Haym Salomon, and passed a resolution placing an account of his efforts in the Congressional Record.

Robert Morris, George Washington and Haym Salomon Statue

Source: Spiterman via Flickr

On December 15th, 1941, the City of Chicago erected the statue seen above, depicting George Washington flanked by Haym Salomon and Robert Morris. It stands today at the intersection of Wabash and Wacker Drive. Under the image of Salomon it says:

“Haym Salomon – Gentleman, Scholar, Patriot.
A banker whose only interest was the interest of his Country.”

To Haym Salomon

So this Saturday, as you’re gathered with your family enjoying the sunshine, barbecuing in the backyard, and waiting for the fireworks to start, raise a glass and tell the story of the patriot, the rebel spy, and the man that George Washington turned to when it counted the most – Haym Salomon.