The case for Alexander Hamilton

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http://andreaskluth.org/2010/11/10/the-case-for-alexander-hamilton-i/

The case for Alexander Hamilton (I)

by Andreas Kluth on November 10, 2010
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Alexander Hamilton is “my favorite” Founding Father, as I’ve hinted several times before. But I’ve never actually explained what I meant by that.

In this and the next post, I will try to unravel which aspects of this complex, visionary and soulful man (just look at that portrait above!) so resonate with me.


  • In this first post, I’ll sketch the man, his temperament, his journey and philosophy about people and life.
  • In the next post, I’ll describe his intellectual contribution to American governance and political philosophy.

You’ll see after the second post that the man can’t be separated from his ideas, nor the ideas from the man. And you’ll see (I hope) how timeless — meaning: relevant today — Hamilton is.

I will give you my interpretation, but my main source is Ron Chernow’s excellent biography of Hamilton. (I am now reading Chernow’s new biography of George Washington as well.)

Now, to Hamilton, the man:

1) He was an outsider who ended up on the inside


Hamilton was the only Founding Father born outside of what became the United States. He was born in a Caribbean hellhole (called Nevis, in the West Indies) that seemed to specialize in tropical diseases, random violence and the slave trade.

And he was born as an ‘outsider’ in another way: he was illegitimate. His mother was not married to his ostensible father, James Hamilton, and even James Hamilton was probably not his biological father (instead, that seems to have been a gentleman by the name of Thomas Stevens).

young_alexander_hamilton.jpg


His childhood was rough. When Hamilton was a teenager, in the space of a few years,

  • his mother died,
  • his father vanished,
  • his aunt and uncle and grandmother also died,
  • his cousin committed suicide, and
  • Alexander and his brother were disinherited and left penniless orphans.
As Chernow puts it:
Chernow said:
that this fatherless adolescent could have ended up a founding father of a country he had not yet even seen seems little short of miraculous.


2) He had an open mind


This experience might mark him as, yes, an American archetype: The Immigrant Who Reinvents Himself.

Reinvent himself he certainly would — several times throughout his short life, and in a unique, and uniquely compelling, way.

He began by getting himself to America. Through savvy, wit, charm, chutzpah, and luck, Hamilton found himself on a trading ship to New York, with an allowance from an older mentor and a job that gave him a bottom-up view of international commerce, shipping and smuggling. (Much later, this expertise would serve him well, when he founded the US customs service and Coast Guard.)

Already his mind was expansive, open to new worlds, both of experiences and ideas. Coming from the Caribbean, he was bilingual in English and French (although, unlike Franklin, Jefferson and Adams, he would never set foot in that superpower of the day).

He was, in a word, cosmopolitan. And this would, yet again, mark him as an outsider in America. For America has always had, and continues to have, an ambivalent — nay, schizophrenic — relationship with cosmopolitan types. Yes, Americans sometimes admire and appreciate them and their perspective. But they also distrust cosmopolitans and are ready to exclude them at a whim — by calling them elitist, for example, or insinuating that they are not real Americans.

Hamilton was also unapologetically erudite, immersing himself into the classics, and in particular in Plutarch, one of my favorites. Among the Founding Fathers he was in good company in this respect, for they all valued intellect and learning. But in America at large this erudition would — yet again — make him potentially suspect, for America has always had, and continues to have, the same ambivalence toward intellectuals that it has toward cosmopolitans.

3) He had a romantic sense of honor

His illegitimate and Caribbean background, and his cosmopolitan style, made him vulnerable to attacks on his reputation. Understandably enough, Hamilton was therefore unusually touchy about his good name, and fiercely keen about defending it. He was an Enlightenment man who believe in reason and law, but he simultaneously retained an older, classical, romantic, even Homeric sense of honor.

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His thirst to earn and defend his honor — and specifically his American and patriotic honor — made him demand to be in battle, in the line of actual fire. So he fought with extra valor in the war and came to the attention of George Washington. Hamilton was 22 and Washington 43 when the general made the young man his protégé and chief of staff, giving Hamilton not only a perfect view into American history as it unfolded but a role in shaping it.

Washington was tall, imposing, dignified, laconic and kept his emotions bottled up. Hamilton was five foot seven, slim and athletic, elegant, gave his emotions free reign and was so articulate that he talked himself into trouble as much as out of it. The two men, so different and yet like father and son, would form one of the most important relationships in history.

Hamilton yearned to be more than chief of staff. He wanted to become a war hero, by commanding troops and risking his life. At Yorktown, Washington gave him that command and Hamilton became that hero, after fighting as though driven by a death wish.

In this respect, Hamilton was certainly very different than those Founding Fathers who would become his enemies — above all Jefferson, who somehow always found himself where there was no physical danger, and in one case (when he was governor of Virginia) actually fled on horseback from fighting, for which he was accused of dereliction of duty.

(Remember this when we get to the next post, and the hyper-partisan fight between Jeffersonians and Hamiltonians.)

4) He was ethical but all-too-human

The biggest ethical issue of the day was, of course, slavery. And how did Hamilton regard this institution?

As despicable and evil. He was unambiguous and clear about it. He was the first and staunchest abolitionist among the Founding Fathers.

To us this is a no-brainer, but to Americans at the time it was not. Washington, Jefferson, Madison and all the Southern Founding Fathers owned, bought and sold slaves. They may have had qualms, but never enough to free their slaves or to push for abolition (Washington was the only one of them to emancipate his slaves after his death). This, of course, is the founding irony at the heart of the American idea: Thomas Jefferson owned human beings at the very instant in which he wrote the words “… life, liberty and the pursuit of happiness.”

So Hamilton was unusual in that he was ethically on the right side of this issue. Which would make it all the more ironic — in that inevitable American way — that his political enemies, including some of the aforementioned slave owners, would later try to paint him as immoral.

How? The way one does this in America: with a sex scandal. Hamilton, stupidly and unnecessarily, allowed himself to be seduced. It was America’s first public and politicized bimbo eruption, a sort of proto-Lewinsky affair. It is of no interest or consequence to us, but it was in its day.

Hamilton was certainly a charmer and flirt. That episode aside, however, Hamilton was also a devoted husband and father, perhaps because he had never had a father. He and his wife had an intimate bond. And his eight children meant everything to him. When his oldest son, handsome and also sensitive about his honor, died in a duel, Hamilton went to pieces in grief.

5) He had a nuanced grasp of human nature


From his reading of history and the classics, and his own upbringing in the West Indies, Hamilton developed a sophisticated worldview that was somewhat pessimistic about human nature, at least in comparison to the — then as now — reflexive and simplistic optimism that usually wins arguments in America.

Thus he saw the potential evil of tyranny — which, of course, he was actively fighting with Washington in the war against the British crown — but he also saw the potential evil of mobs, of anarchy. There was a lot of violence in those days, much of it directed at Tories or loyalists, who might easily end up tarred-and-feathered or even lynched. But Hamilton, even though he fought for the republic, always remained humane towards individuals on the other side — and wary of mobs on any side.
Our countrymen have all the folly of the ass and all the passiveness of the sheep in their compositions,
he once said. And that would lead him to say things such as this:
We should blend the advantages of a monarchy and of a republic in a happy and beneficial union.
But that will be the segue to the next post.

6) He died as he lived, but too young


But before I hand over to that next post, just one final anecdote that gives a glimpse into his character. Because he guarded his reputation and honor so jealously, he had, on occasion, to duel. He certainly saw the folly of dueling as he got older. He must even have hated it after he lost his beloved son in a duel.

But when, in the ordinary course of bitter partisan politics, certain things were said between him and a vulgar mediocrity named Aaron Burr, Hamilton picked up the very pistols his son had used, rowed across the Hudson to New Jersey (duelling was illegal in New York), and met his challenger in a clearing by the river.

It appears that Hamilton shot first, but “threw his shot away”, in the parlance. In other words, he deliberately missed by firing into air, thus signaling that both parties had satisfied the requirements of honor and could end this business without shedding blood.
Then it was Burr’s turn. But Burr had a different sense of chivalry. He aimed at Hamilton and found his target.

Hamilton, in convulsions, was rowed back to New York, where he died many agonizing hours later, as his family and city grieved over the loss of a great man, who, aged about 47, had already changed the world in ways that would only fully become clear generations later.

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The case for Alexander Hamilton (II)

by Andreas Kluth on November 18, 2010
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Alexander Hamilton came from a different background than the other Founding Fathers, one that gave him a different worldview and philosophy of governance and freedom.

It is a philosophy that was bitterly contested at the time — and still is today, especially in this “Tea-Party” year. But overall, Hamilton’s vision is the one that prevailed. We today are, to a surprising extent, living in Hamilton’s America. So what was that vision?

  1. In the previous post, I looked at Hamilton as a man, at his character, life and background.
  2. In this post, I try to describe the ideas that such a character, life and background produced, and their timeless (but, as you’ll see, tragic) legacy.
Balance in government

Recall from the previous post that Hamilton, illegitimate and foreign-born, felt like an outsider in America, felt vulnerable as result, and had reason to be pessimistic about human nature, for he had seen, in the West Indies and in revolutionary America, atrocious human acts.
In particular, he had seen how dangerous mobs could be.

Recall also that he was a superb intellect, deeply versed in the classics.

It was therefore natural that he should appreciate an ancient concept, dating all the way back to Polybius and Aristotle: that balance is necessary to preserve liberty.

The government that best reflects human nature, in this view, blends the elements of

  • monarchy,
  • aristocracy (which literally means rule of the best) and
  • democracy.
But they have to stay in balance, because an excess or corruption of any one of these elements will destroy liberty, by becoming, respectively,

  • tyranny,
  • oligarchy or
  • mob rule.
Thus, for example, Aristotle and Polybius considered Carthage and Rome balanced, but Athens during the time of Socrates to be too democratic to be stable. In Hamilton’s own day, the French Revolution might illustrate the point even better: tyranny and oligarchy (the ancien régime) gave way to mob rule (the guillotine), which gave way to another tyranny (Napoleon), without any intervening liberty in more than motto.

In particular, Hamilton and several other important Founding Fathers, especially James Madison, shared with the classical philosophers an admiration of Rome. When they wrote public treatises, such as The Federalist Papers (discussed below), they adopted Roman pen names. Hamilton, for instance, was Publius (after Publius Valerius, the first consul of Republican Rome).

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Madison

Early in their careers, Hamilton and Madison were intellectual allies in this respect. They wanted a republic, not a democracy. They feared tyrannical minorities and majorities equally. Thus they became the most important individuals in the creation and passing of America’s Constitution.

Madison had more intellectual input into the actual document, and was the note-taker during the Constitutional Convention. But Hamilton and Madison then collaborated in campaigning for that Constitution to be ratified by the states. (The document, much as we esteem it today, was very controversial and ratification was a close call.)

The Federalist Papers

This meant above all explaining and interpreting the proposed Constitution, which Hamilton and Madison, along with John Jay, later the first Chief Justice, did with one of the most impressive literary achievements in history: The Federalist Papers.



The Federalist Papers are a collection of 85 essays, of which 51 are attributed to Hamilton, 29 to Madison and 5 to Jay (so Hamilton was clearly the main author). The essays amount to about 175,000 words. And they wrote them in the space of only seven months, in their spare time (!), for they were still pursuing their main vocations during office hours — Hamilton as a lawyer.

Here is a measure of how important The Federalist Papers continue to be: By the year 2000, they had been quoted 291 times in Supreme Court opinions, with the frequency of citations rising with the years. (p. 261 in Ron Chernow’s biography of Hamilton)

And in these Federalist Papers, we see Hamiltonian values — meaning the ancient values of balance — on display. Hamilton envisioned:

  • a strong executive, (≈ monarchy)
  • a strong legislature (≈ democracy), and
  • an independent judiciary that could and should, if necessary, overrule the “popular will” if it destroyed liberty. (≈ aristocracy)
Judicial Review (and Prop 8 )

That this last bit is the “aristocratic element” might take a bit of explaining. To be sure, it is not the only aristocratic element in America’s overall structure. The electoral college originally had actual powers to select the president. Members of the upper chamber of the legislature — called the Senate, in direct allusion to Rome — were elected by state legislatures rather than the voters (an idea that many in the Tea Party want to bring back). And so on.

But the judiciary seems to me to be the most important aristocratic check on both potential tyranny and mob rule. In Federalist Nr 78, Hamilton wrote that

Alexander Hamilton said:
no legislative act … contrary to the constitution can be valid.

This sounds simple and obvious now, but it is not actually in the Constitution. In effect, Hamilton said that the Supreme Court (ie, a meritocratic elite) must be able to overturn legislation (ie, the popular will). Hamilton thus prepared the way for a later Supreme Court decision (Marbury v Madison, 1803) that established the concept of judicial review.

And that, of course, is what we have today. If you want to see the inherent and eternal tension that Hamilton foresaw, look, for instance, to the controversy about California’s “Prop 8“:

  • it is a ballot measure (ie, an expression of the popular will),
  • in which a majority voted to restrict a right (marriage) of a minority (gays and lesbians),
  • before a federal court overturned that vote.
Each side in the Prop 8 debate is screaming “tyranny” at the other, but Hamilton’s notion of balance will prevail. Hamilton, in the 18th century, would certainly have been surprised by the context (gay marriage) but not by the principle involved.

Center and periphery: “enumerated” and “implied” powers

That example of Prop 8, in which a federal judge has overturned a state ballot measure, also shows another aspect of Hamilton’s vision: there also had to be a balance between the core and the periphery, between central government and state government.

Recall the previous post again: Hamilton was actively fighting — as George Washington’s chief of staff, mostly — in the Revolutionary War, whereas some of the other Founding Fathers, and specifically Hamilton’s future enemies (I will get to them in a minute), remained in the comfort of their plantations or with the Continental Congress in Philadelphia, with its bustling dinner-party circuit.

What vantage point did that give Hamilton on the fledgling nation?

He saw that the nation was not viable as such. If the United States then has an equivalent today, it would be the United Nations.
America was fighting a professional army and navy (the Brits) with a ragtag force of militiamen who had no uniforms, and often no shoes and weapons. These Americans enlisted for a year at a time, which meant that Washington feared that his entire fighting force might literally disintegrate and vanish at the end of each enlistment period.

The nation, such as it was, had no powers of taxation. At all. So it had no money to pay its soldiers. And it could not issue debt. It relied on the individual states both for money and for soldiers. On occasion, the American troops mutinied, once even marching on Philadelphia and sending Congress to flee from its own soldiers.

This was not an abstract matter for Hamilton or Washington: They were starving and freezing with their soldiers at, for instance, Valley Forge, a miserable plateau in Pennsylvania where the Americans wintered in 1778-9.

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The painting above (of Washington and Lafayette on horseback, with perhaps Hamilton as the rider behind them?) does not really do the misery justice. According to Chernow’s new biography of Washington, the Americans (unlike the soldier in the picture) had no shoes, no coats, sometimes no shirts, and were dying of cold, disease and starvation.

So Hamilton and Washington formed a vision of a strong center, one that could feed and clothe its soldiers and hold the states together. For the center to be strong, it would have to have a professional army, and powers of taxation and borrowing (“Aha,” say the Tea Partiers of 2010…).
When opponents later charged that the Constitution did not explicitly mention the things necessary to build such a strong central government (for example a Central Bank), Hamilton replied that

Alexander Hamilton said:
it is not denied that there are implied as well as express powers.

And thus Hamilton, almost en passant, submitted another evergreen argument into American politics, which you hear debated this year by Tea Partiers parsing “enumerated” and “implied” powers.

But Hamilton was not for a Leviathan (I believe he would be shocked by the bloat of our federal government today). He definitely envisioned the central government, though strong, as sitting atop states that remained otherwise sovereign in their daily affairs. Hence the “federalist” nature of the new country, and the name Hamiltonians called themselves: Federalists.

The federal balance that Hamilton conceived was so stable that Switzerland, in 1848, imported it wholesale and Germany, a century later, in large part.

The first American Capitalist


Alexander Hamilton was the only Founding Father who grasped not just one but both revolutions occurring in his time:

  1. the political revolution in governance and
  2. the industrial revolution.
For background: America was an agrarian society. The colonies were dependent on Britain for manufactures. There were no companies as such (both the legal form and the accounting systems did not exist in any form recognizable to us). Banks as such did not exist. Stock exchanges did not exist.

Hamilton’s enemies, primarily Thomas Jefferson, wanted to keep it that way. To Jefferson, an agrarian America was more “pure” than an industrial America. Here, arguably, likes the origin of America’s schizophrenia regarding “Main Street” versus “Wall Street”. But let’s remember (recall once again the previous post) that the agrarian “purity” of which Jefferson talked was based on slave plantations such as his own in Virginia. It was pre-capitalist, yes, but in a feudal, illiberal, dehumanizing way.

Hamilton, on the other hand, wanted to abolish slavery and looked ahead to a capitalist era. He read Adam Smith’s (then new) Wealth of Nations. He grasped modern concepts of finance. He wanted America to manufacture things, and to finance this new economy with banks and securities.

So he entered the most fruitful period of his career, as the first Treasury Secretary. Washington was president, and the only two other members of the cabinet were Thomas Jefferson as Secretary of State and Henry Knox as Secretary of War. But neither Jefferson nor Knox had much to do, whereas Hamilton became a de facto prime minister to Washington in putting the new country together. Within a few years, Knox had a dozen civilian employees in War, Jefferson had six at State, and Hamilton had … more than 500 at the Treasury. Knox was a jovial nature and didn’t care. But Jefferson was seething.

Hamilton was too busy to care. Within a few years, he created:

  • a central bank,
  • a monetary policy and paper currency to go with it,
  • a stock exchange,
  • a coast guard and customs service to collect the tariffs that were to finance the government (there was no income tax).
In short, he seeded the modern American economy.

The tragic lesson: American inversion of reality

You may agree by now that Hamilton was a genius and that, yes, his vision, more than any other Founding Father’s, created the nation we know. But I personally have learned more from the tragic aspect of his career.

The tragedy has to do with the political inversion of reality that was threatening to undo Hamilton’s career when he died so prematurely in his duel.
And that, too, may be the Founding Fathers’ legacy to us.

What am I talking about?

Opposition to Hamilton and his ideas started early. Some compatriots always found something sinister in his charm and success and genius, in his foreign origins and cosmopolitan attitudes, and in specific opinions such as Hamilton’s abolitionism.

For example, during the struggle in the states to ratify the Constitution, the anti-federalists began posing as populists, even though the most prominent of them were rich slave owners. Patrick Henry of Virginia — the very same Henry who famously said “Give me Liberty or give me Death!” — argued against the Constitution by telling delegates that

Patrick Henry said:
They’ll free your niggers.

Others, less blunt than Henry, wrapped their scorn in the emerging meme of the day, which painted Hamilton as a closet monarchist or aristocrat, whereas the (slave-owning) agrarians were the true democrats.

George Washington, who usually kept a dignified distance from the political swamp but reliably sided with Hamilton, wryly observed the irony:

George Washington said:
It is a little strange that the men of large property in the South should be more afraid that the Constitution will produce an aristocracy or a monarchy than the genuine, democratical people of the East.

By the “people of the East” he meant the mostly northern farmers, merchants and industrialists in Hamilton’s circles.
Hamilton himself also deployed his irony. In a newspaper piece in 1791, referring to Madison and Jefferson, he wrote (Chernow, p. 307):

Alexander Hamilton said:
As to the negroes, you must be tender upon the subject … Who talk most about liberty and equality …? Is it not those who hold the bill of rights in one hand and a whip for affrighted slaves in the other?

But irony rarely wins in America. Then as now, the most effective political strategy in American politics is relentlessly repetitive attack until reality becomes what the attacker wants it to be. Jefferson was the worst offender, but Madison, Hamilton’s erstwhile soulmate, was just as bad after he split from Hamilton and went over to the “Republican” side.

And let’s reflect on that label the Jeffersonians chose, for a moment. Why call yourself “Republican” if not to imply that your opponents are un-republican? Everything you’ve read in this post so far tells you that Hamilton was a true republican, and yet Jefferson and his cronies now campaigned to make people think the opposite.

And cronies they had plenty. (Both sides did, to be fair). The Fox News of the day was the National Gazette, first published in 1791, a newspaper that served as the mouthpiece for Jeffersonian attacks branding Hamilton as a monarchist, tyrant and what not.

And thus it was that

  • the future presidents Jefferson and Madison, the patrician owners of slaves and plantations, became known and remembered for generations as the folksy democrats who were close to the land and people, whereas
  • Hamilton, the illegitimate quasi-orphan from the Caribbean who had worked his way to success with sheer talent and grit and who wanted to free the slaves, became the elitist aristocrat.
I have, in the paragraphs above, suggested several modern analogs to the issues raised in this post. But I will leave you to ponder this last subject on your own. And I will end, very much as Hamilton might, on that note of pessimism.

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[FONT=Times New Roman, Times, serif]The Curse of Government Debt[/FONT]
[FONT=Times New Roman, Times, serif]In a lengthy "report" to Congress on the topic of the public debt Hamilton said that "a national debt, if it is not excessive, will be to us a public blessing." He would spend the rest of his life politicking for excessive government spending — and debt. The reason Hamilton gave for favoring a large public debt was not to finance any particular project, or to stabilize financial markets, but to combine the interests of the affluent people of the country — particularly business people — to the government. As the owners of government bonds, he reasoned, they would forever support his agenda of higher taxes and bigger government. (He condemned Jefferson's first inaugural address and its minimal government message as "the symptom of a pygmy mind.") No wonder one historian entitled his book on Hamilton "American Machiavelli." [/FONT]
[FONT=Times New Roman, Times, serif]Wall Street financiers naturally took an immediate liking to Hamilton's idea, and became the financial cornerstone of the Federalist Party (and later, the Whigs and Republicans). When Hamilton engineered the nationalization of the states' debt as treasury secretary — something that was totally unnecessary since many states like Virginia had nearly paid off their war debts — the plan was to cash out much of the old debt at face value. This immediately became public knowledge in New York City, but the news spread ever so slowly to the rest of the country. Consequently, Hamilton's friends and supporters from New York City and New England went on a mad scramble down the eastern seaboard, purchasing bonds from hapless war veterans (who had been paid in bonds) for as little as two percent of par value. Huge fortunes were made by these slick New York speculators. Robert Morris pocketed a nifty $18 million. John Quincy Adams wrote to his father that the wealthiest Federalist lawyer in Massachusetts made a huge fortune with this caper. Hamilton participated in this parade of plunder himself, but claimed that the profits he made were for his brother-in-law.[/FONT]
[FONT=Times New Roman, Times, serif]The link between Wall Street and the federal government was cemented into place later on, when investment banks took on the responsibility of marketing the government's bonds, which of course they still do to this day. Thus, Wall Street investment bankers became inveterate lobbyists for any and all tax increases (on the rest of the population, anyway) to assure that their own principal and interest would be paid, and that they could promise their clients — the purchasers of government bonds — that the bonds were a good investment. They were corrupt from the very beginning. [/FONT]
[FONT=Times New Roman, Times, serif]When Hamilton and George Washington led some 15,000 conscripts into Pennsylvania to enforce the hated whiskey tax, the purpose was not only to collect the tax and reassure bondholders, but also to send a message to any future tax resisters. The volunteer officers who led the conscripts were mostly "from the ranks of the creditor aristocracy in the seaboard cities," wrote Claude Bowers in Jefferson and Hamilton. (The rebellion succeeded, nevertheless. George Washington pardoned all of the tax protesters despite Hamilton's hysterical opposition and his desire to hang all of them.)[/FONT]
[FONT=Times New Roman, Times, serif]James Madison remarked that this episode revealed Hamilton's agenda of "the glories of a United States woven together by a system of tax collectors." Douglas Adair, an editor of The Federalist Papers, wrote that "with devious brilliance, Hamilton set out, by a program of class legislation, to unite the propertied interests of the eastern seaboard into a cohesive administration party." He also "transformed every financial transaction of the Treasury Department into an orgy of speculation and graft in which selected senators, congressmen, and certain of their richer constituents . . . participated." If this sounds familiar it is because the political descendants of these eighteenth-century "propertied interests" are today's benefactors of the Wall Street Plutocrat/D.C. Political Class $700 Billion Bailout Bill of 2008. [/FONT]
[FONT=Times New Roman, Times, serif]When Hamilton's Federalist Party consolidated its power during the Adams administration, government spending and debt skyrocketed. Citizens were prohibited to criticize it, however, thanks to the Sedition Act that outlawed free political speech. The national debt was so large that 80 percent of the government's annual expenditures were needed to service the debt. This was exactly what Hamilton wanted. As John C. Miller, author of The Federalist Era, wrote, Hamilton's main objective was "concentrating economic and political power in the Federal government," even if it meant destabilizing the entire nation's economy.

www.lewrockwell.com/dilorenzo/dilorenzo151.htmlCached - Similar
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[FONT=Times New Roman, Times, serif]The Founding Father of Central Banking[/FONT]
[FONT=Times New Roman, Times, serif]Hamilton is also considered to be the founding father of central banking since America's first central bank, the Bank of the United States (BUS), existed primarily due to his efforts as Treasury Secretary. As William Graham Sumner wrote in his biography of Hamilton, however, "[A] national bank . . . was not essential to the work of the Federal Government." The real purpose of Hamilton's bank, Sumner believed, was "the interweaving of the interests of wealthy men with those of their government." And interweave it did, providing cheap credit to business supporters of the Federalist Party, attempting to engineer boom-and-bust cycles to influence elections (called "political business cycles" in today's parlance) and even financing the political campaigns of BUS supporters. [/FONT]
[FONT=Times New Roman, Times, serif]The BUS was a disaster for the general public, however; excessive money creating by the BUS printing press caused 72 percent inflation in its first five years, from 1791 to 1796. It became so unpopular that its twenty-year charter was not renewed, but then the War of 1812 gave it a new life, and it was resurrected in 1817. It immediately caused the Panic of 1819, and did what all central banks have always done: generated boom-and-bust cycles for the next twenty years. The bursting of the housing bubble in our time is the latest example of this hoary tradition. [/FONT]
[FONT=Times New Roman, Times, serif]Hamilton's BUS was de-funded by President Andrew Jackson, and then a version of it was resurrected once again in 1863 by the neo-Hamiltonian Lincoln administration with several National Currency Acts. This, and other interventions of that period (50 percent average tariff rates, massive corporate welfare for the railroad industry, income taxation, pervasive excise taxation), led historian Leonard Curry to observe in his book, Blueprint for Modern America: Nonmilitary Legislation of the First Civil War Congress, that the interventions "ushered in four decades of neo-Hamiltonianism: government for the benefit of the privileged few." [/FONT]
[FONT=Times New Roman, Times, serif]The record of Hamiltonian central banking from that time until the Fed was created in 1913 was summarized in a scholarly paper by economists Michael Bordo, Anna Schwartz and Peter Rappaport: "monetary and cyclical instability, four banking panics, frequent stock market crashes, and other financial disturbances." The Wall Street elite's response to all this central bank-induced monetary instability was even more centralized banking with the creation of the Federal Reserve Board. It may have meant instability to the ordinary citizens, but was the source of great riches to the banking industry and other members of the politically well-connected class. Sound familiar?[/FONT]
[FONT=Times New Roman, Times, serif]Things have not changed at all to this day. A recent Fed publication entitled "A History of Central Banking in the United States" proudly boasts that "the Federal Reserve has similarities to the country's first attempt at central banking, and in that regard it owes an intellectual debt to Alexander Hamilton" who, the Fed says, "sounded like a modern-day Fed chairman." [/FONT]
[FONT=Times New Roman, Times, serif]
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When Jefferson and his followers fiercely opposed Hamiltonian statism they were fighting to avoid bringing the rotten, corrupt, and economically-impoverishing system of British mercantilism to America. They understood what Adam Smith wrote in The Wealth of Nations, which was a harsh condemnation of British mercantilism as both corrupt and impoverishing. Indeed, many of these men (or their ancestors) came to America in the first place to escape from that very system. Hamilton mocked Adam Smith just as he mocked Jefferson's "pygmy mind" and his "excessive concern for liberty."
[/FONT]
[FONT=Times New Roman, Times, serif]It may have taken several generations, but that system of "crony capitalism" or "government for the benefit of the privileged few" has been cemented into place for quite some time now. The politically incestuous relation between the banking and finance industries and government is the sole cause of the current economic crisis, particularly the boom-and-bust cycle caused by the Fed and the system of fractional reserve banking (i.e., lending money that you don't have) that it administers. Hamilton's Curse is plaguing America once again. [/FONT]
 
The Corrupt Origins of Central BankingMises Daily:Wednesday, November 05, 2008 by Thomas J. DiLorenzo
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http://www.justplainpolitics.com/#http://www.justplainpolitics.com/#
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First Bank of the United States, Philadelphia, 1791

Central banking has been a corrupt, mercantilist scheme and an engine of corporate welfare from its very beginning in the late 18th century. The first central bank, the Bank of North America, was "driven through the Continental Congress by [congressman and financier] Robert Morris in the Spring of 1781," wrote Murray Rothbard in The Mystery of Banking (p. 191). The Philadelphia businessman Morris had been a defense contractor during the Revolutionary War who "siphoned off millions from the public treasury into contracts to his own … firm and to those of his associates." He was also "leader of the powerful Nationalist forces" in the new country.
The main objective of the Nationalists, who were also known as Federalists, was essentially to establish an American version of the British mercantilist system, the very system that the Revolution had been fought against. Indeed, it was this system that the ancestors of the Revolutionaries had fled from when they came to America. As Rothbard explained, their aim was

To reimpose in the new United States a system of mercantilism and big government similar to that in Great Britain, against which the colonists had rebelled. The object was to have a strong central government, particularly a strong president or king as chief executive, built up by high taxes and heavy public debt. The strong government was to impose high tariffs to subsidize domestic manufacturers, develop a big navy to open up and subsidize foreign markets for American exports, and launch a massive system of internal public works. In short, the United States was to have a British system without Great Britain. (p. 192)

An important part of the "Morris scheme," as Rothbard called it, was "to organize and head a central bank, to provide cheap credit and expanded money for himself and his allies. The … Bank of North America was deliberately modeled after the Bank of England." The Bank was given a monopoly privilege of its notes being receivable in all tax payments to state and federal government, and no other banks were permitted to operate in the country. It "graciously agreed to lend most of its newly created money to the federal government," wrote Rothbard, and "the hapless taxpayers would have to pay the Bank principal and interest."

http://mises.org/daily/3167
 
Despite these monopolistic privileges, a lack of public confidence in the Bank's inflated notes led to their depreciation and the Bank was privatized by the end of 1783. But Morris did not give up on his scheme. He recruited a young Alexander Hamilton to serve more or less as his political puppet within the Washington administration. (Rothbard called Hamilton "Morris's youthful disciple.") In fact, the reason why Hamilton became Treasury secretary, despite having no reputation at all in the field of finance, was the recommendation by Morris to George Washington. (During the Revolutionary War, when he was an aide to Washington, Hamilton took the time to write Morris a 30-page letter proclaiming that he agreed with every one of his ideas about protectionist tariffs, corporate subsidies, and a government-run bank to finance them.)
Morris and his fellow Nationalists wanted a king-like chief executive who would rule over a mercantilist empire, just as the king of England ruled over his mercantilist empire. They, of course, would be the ones to advise and instruct the "king" and benefit financially from such an empire. So their young protégé Hamilton commenced his seven-year crusade to overthrow the first US constitution — the Articles of Confederation — by calling for a new constitutional convention to supposedly "revise" the Articles of Confederation. At the convention, Hamilton laid out his (really Morris's) plan: a permanent president who would appoint all the governors and who would have veto power over all state legislation. Under such a plan, state sovereignty would have been destroyed, and there would have been no escape from the central government's high taxes, protectionist tariffs, heavy debt, and foreign-policy imperialism — the agenda of the Nationalists.
The Hamilton/Morris plan was defeated, of course, as was the proposal made at the convention to include a central bank among the delegated powers to the federal government. But the government was more highly centralized, as "the Nationalist forces pushed through a new Constitution" and "were on their way to re-establishing the mercantilist and statist British model…" (p. 193). They begrudgingly acquiesced in a Bill of Rights in return for the anti-Federalists' support for the new Constitution. And most importantly, writes Rothbard,
A critical part of their program was put through in 1791 by their leader, Secretary of the Treasury, Alexander Hamilton, a disciple of Robert Morris. Hamilton put through Congress the First Bank of the…. United States…. modeled after the old Bank of North America [whose]….longtime president and former partner of Robert Morris, Thomas Willing of Philadelphia, was made president

 
Mises.org admits that it's an enemy of the US constitution, and wants it repealed. Those who want the US constitution repealed should have their status as US citizens revoked, because they are unworthy of it.

Fascism/libertarianism has shown it's true colors today. Enemies of the constitution, enemies of the American people, enemies of everything America stands for, enemies of freedom for all time.
 
"And if novelties are to be shunned, believe me, the most alarming of all novelties, the most wild of all projects, the most rash of all attempts, is... to preserve our liberties and promote our happiness." - James Madison

This is what your God Madison thinks about liberty and happiness, libertarians. Why do you hate liberty and happiness?
 
The record of Hamiltonian central banking from that time until the Fed was created in 1913 was summarized in a scholarly paper by economists Michael Bordo, Anna Schwartz and Peter Rappaport: "monetary and cyclical instability, four banking panics, frequent stock market crashes, and other financial disturbances." The Wall Street elite's response to all this central bank-induced monetary instability was even more centralized banking with the creation of the Federal Reserve Board.

God this is stupid fascist/libertarian nonsense. There was no central banking in the United States in the century after your slave owning hero (it is curious that all your heroes of freedom and liberty owned slaves, is it not?) Andrew Jackson abolished it, and thus thrust the United States into a prolonged depression. The Federal Reserve was established at a time when there was no central banking in the US in reaction to a panic caused by the lack of such a crucial and necessary device of a centralized government, which every government in the fucking world has and only idiotic populist garbage rejects. You can tell a demagogic idiot the moment the words "central banking" comes out of their fucking mouth. It's a dead issue because they've been proven so thoroughly fucking wrong so many fucking times, but they keep on rising from the dead and spewing lies to the idiotic mob which knows nothing and eats them up like stupid proles.
 
God this is stupid fascist/libertarian nonsense. There was no central banking in the United States in the century after your slave owning hero (it is curious that all your heroes of freedom and liberty owned slaves, is it not?) Andrew Jackson abolished it, and thus thrust the United States into a prolonged depression. The Federal Reserve was established at a time when there was no central banking in the US in reaction to a panic caused by the lack of such a crucial and necessary device of a centralized government, which every government in the fucking world has and only idiotic populist garbage rejects. You can tell a demagogic idiot the moment the words "central banking" comes out of their fucking mouth. It's a dead issue because they've been proven so thoroughly fucking wrong so many fucking times, but they keep on rising from the dead and spewing lies to the idiotic mob which knows nothing and eats them up like stupid proles.

Why do we need a private centrall bank?
Could not the treasury print the money?
 
Nothing DiLorenzo writes is credible, unless you think "long live the Confederacy!!" to be a worthwhile reading...

God, I didn't read the author. This makes it a million times worse. Who am I going to trust, the guys that opposed and later abolished slavery, while writing and getting the constitution ratified, or the guys who opposed the constitution and seceded when they thought they were going to have to give up their slaves? DiLorenzo is the guy who represents the dark side of American politics, the side that got it's ass kicked. We grew great on the system the federalists established, not this abominable historical system of losers, and there'd be no reason to reanimate this long dead corpse besides the fact that it happens to suit some people's short term ideological goals. These people are no better than their slave trading ancestors.
 
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