Sunday, April 25, 2004

Alexander Hamilton Hagiography

It's still history-geek day here at Old Hickory's Weblog.  After wading through all those Jefferson Davis speech and that godawful segregationist Confederate "heritage" [accurate description falls outside of AOL's Terms of Service], I'm almost ready for another edition of the Chuckie Watch.  I feel like I'm in tune with Chuckie's wave length after all that.

But first, I just want to remark on another piece of reactionary history that's out there undercutting a proper appreciation of democractic history at the moment.  I'm referring to the excerpts from Ron Chernow's new biography of Alexander Hamilton (2004) that is excerpted in the current Business Week (05/03/04 issue).

Now, Chernow's House of Morgan was a capable and readable history of one of America's most important banking empires.  And don't get me wrong about Hamilton.  He was one of the prime architects of the Constitution and, as one of the Federalist Papers authors, was one of its most effective advocates in the debates over ratification.  But this is just silly:

As author of 51 of the 85 essays in The Federalist Papers, the classic gloss on the Constitution, Alexander Hamilton made many distinguished contributions in the political realm -- but so did Benjamin Franklin, John Adams, Thomas Jefferson, and James Madison. In contrast, when it came to the parallel economic upheavals of the period -- the industrial revolution, the expansion of global trade, the growth of banks and stock exchanges -- Hamilton was an American prophet without peer. No other founding father straddled both of these revolutions, and therein lay Hamilton's novelty and greatness. He was the messenger of America's economic future, setting forth a vision of an urban manufacturing society that some found enthralling, others unsettling, but that ultimately prevailed. He stood squarely on the modern side of a historical divide that separates him from the other founders, making him uniquely our spiritual kin.

"Uniquely our spiritual kin"?  Good Lord, the man was a monarchist.  He didn't believe that democratic government could funtion at all with a more-or-less authoritarian central government, which he hoped to achieve under the Constitutional system by using the Bank of the United States to corrupt Congress and make it do the Executive's bidding.

It's really superficial to see the Bank of the United States that Hamilton promoted, Thomas Jefferson opposed and Andrew Jackson eventually abolished as being analogous to today's central bank (the Federal Reserve), whose necessity no one but the loony far-right seriously disputes.  But it wasn't.  It was an instrument of the rich to preserve and extend their concentration of wealth, and it was used to pay off a substantial portio of Congress.  It was a menance to democracy and honest government and a major barrier to economic progress and opportunity.

Chernow praises one of Hamilton's actions during his tenure as the Washington Administration's Secretary of the Treasury as showing his good business sense.  But even Chernow's description shows that Hamilton was helping monied speculators rip off individual investors that had bought Revolutionary bonds:

How exactly the debt should be handled was an inflammatory issue. During the Revolution, many affluent citizens had invested in government paper, and many veterans had been paid with IOUs that plummeted in price after they were demobilized. In many cases, these upright patriots, either needing cash or convinced they would never be repaid, had sold their certificates to speculators for a pittance. Under the stimulus of his funding scheme, with government repayment guaranteed (albeit at lower interest rates), Hamilton expected these bonds to soar from depressed levels and regain their full face value.

This pleasing prospect, however, presented a political quandary. If the bonds appreciated, should speculators pocket the windfall? Or should the money go to the original holders -- many of them brave soldiers -- who had sold their depreciated government paper years earlier? Hamilton knew the answer to this riddle would define the future character of American capital markets. Doubtless taking a deep breath, he wrote that "after the most mature reflection" about whether to reward original holders, he had decided against this approach as "ruinous to public credit." Among other things, such "discrimination" in favor of former debt holders was simply unworkable. The government would have to track them down, ascertain their sale prices, and trace all intermediate investors who had held the debt before it was bought by current owners -- an administrative nightmare, only made worse by missing paperwork.

Adn Chernow promotes the image of Thomas Jefferson, who opposed Hamilton's schemes to use the federal government to further enrich the wealthy at the expense of less prosperous Americans, as being a foolish idealist, who was apparently influenced by his stay as American minister to ... France!  Chernow writes:

In contrast to this patrician style, Jefferson cherished a vision of America as a rural retreat of Arcadian innocence. Once in New York, the courtly but suspicious Jefferson decided that the country had been corrupted in his absence and that "a preference of kingly over republican government was evidently the favorite sentiment" among well-heeled New Yorkers. The town struck him as infested with Tories and avaricious speculators in government securities -- all of them looking worshipfully toward Hamilton as their favorite.

Twelve years Jefferson's junior, Hamilton had never met him before; he had been a minor artillery captain when Jefferson composed the Declaration of Independence. By the time Jefferson arrived in New York, Hamilton had already trounced Madison in the "discrimination" debate and was hurtling ahead with the rest of his funding scheme. Jefferson feared that this program would create a fiercely loyal following for Hamilton among speculators enriched by it. He was convinced that congressmen were also dabbling in government securities and that "even in this, the birth of our government, some members were found sordid enough to bend their duty to their interests and to look after personal rather than public good." Jefferson derided the idea that Hamilton intended to pay off the government debt. "I would wish the debt paid tomorrow," Jefferson told Washington. "He wishes it never to be paid, but always to be a thing wherewith to corrupt and manage the legislature." ...

This kind of Federalist history just never seems to go away.  Jefferson believed during the Washington Administration that the US should concentrate on what we today would call its "comparative advantage" in international trade, agricultural exports, and rely on readily available manufactured goods that could be obtained from Europe.

By the time of his own Presidency, though, the turmoil in Europe over the French Revolution and the Napoleanic wars led Jefferson to the conviction, which he further with his controversial embargo, that the US had to develop its own manufacturing capability in its own national interest.  And his Administration did more to further that goal than any of Hamilton's schemes.  Jefferson's Administration also paid of the US debt, which was a critical goal for the small, new country in order to participate in international trade uninhibited by the debt constraints that the Hamiltonians would have let remain indefinitely.

It seems that old reactionary interpretations of American history never die.  They just keeping popping up over and over.

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