TheSerpentandtheDove I I 7Londonformuchofthenineteenthcentury.MorganexaminedAmerican
borrowerscarefullyforcreditworthinessbeforeplacingtheirsecuritiesin
theLondonmarket,andbyplacingMorganpartnersasdirectorsofclient
firms, thehousemaintaineda strictandconservativewatchover the
financialpracticesofAmericancompaniesintheinterestoflenders.Fora
generationtheHouseofMorganservedasthedefactocentralbankofthe
UnitedStates.Itrescuedthedollarduringthegoldpanicof 1893 and
preventeda massivefinancialcollapseinthewakeofthepanicof1907.
In 1913 itsplacewastakenbytheFederalReserveBank,whichcontin-
uedMorgan'straditionofclosecollaborationwiththeBankofEngland
untiltheNixonadministration.
TheserelationshipswerecriticalbothtoHamiltoniandomesticand
foreign policy throughout American history, but bilateral finance
andtradewerenottheonlyelementsinHamiltonianthinkingabout
Anglo-Americanrelations.Froma defensivestandpoint,from 1783 to
WorldWarI, GreatBritainhadthepowertomakewarontheUnited
States. IftheBritishnavy supportedtheUnitedStates,however, no
EuropeancountrywasstrongenoughtocrosstheAtlanticwitha fleet
thatcouldinflictseriousdamage.Duringallthistimea goodrelation-
shipwithGreatBritainmeantthatnootherEuropeanpowercouldtrou-
bletheUnitedStatesathome.AtthesametimeCanadaservedasa
hostageforBritishbehaviorinNorthAmerica.IfBritainuseditsnaval
superioritytothreatentheAmericancoast, theUnitedStates bythe
middleofthenineteenthcenturyhadtheresourcestoconquerCanada
byland.Theresultwasa balanceofpowerbetweenthetwoEnglish-
speaking countriesthatwasdistinctlyfavorabletotheUnitedStatesand
grewmoresoastimewentby.
TheAnglo-Americanconnectionalsodrewstrengthfrom thetwo
countries' commoninterestsinEurope.BothBritainandtheUnited
StateshadanoverwhelminginterestinthebalanceofpowerinEurope.
As longastheEuropeannationswere dividedamongthemselves, no
EuropeansuperpowercouldcontestBritain'spoweratsea,andtherefore
nonewthreatscouldariseagainsttheUnitedStates.Thiswasofcourse
thefoundationoftheMonroeDoctrine,anditwastheinterestthatdrew
theUnitedStatestowardinterventiononBritain'ssideinbothworld
warsandintheColdWar.
ThisspecialrelationshipmeantthattheUnitedStatescouldhavean
extraordinarilysimpleandcheapnationaldefensepolicyinthenine-
teenthcentury. For Hamiltoniansin those years, Americansecurity