William Hogeland: Hamilton Speaks Out on the Debt Ceiling! (Or Not)

By William Hogeland, the author of the narrative histories Declaration and The Whiskey Rebellion and a collection of essays, Inventing American History who blogs at http://www.williamhogeland.com. Cross posted from New Deal 2.0

The father of the founding debt may have been most concerned with his wealthy friends, but his ideas spawned the liberal view of government.

At FrumForum, Kenneth Silber has posted a funny interview with Alexander Hamilton, deploying actual Hamilton quotations in order to suggest how our first Treasury Secretary, the founding architect of U.S. finance policy, might advise us in the current debate on national debt. Hamilton’s world was so different from ours that in the post, Hamilton comes off a bit like a wind-up toy:

FrumForum: the 1790s, as the nation’s first treasury secretary, you consolidated state debts into a national debt and ensured the U.S. would pay its Revolution-era commitments. What do you think of S&P’s negative outlook on treasuries now?

Hamilton: When the credit of a country is in any degree questionable, it never fails to give an extravagant premium, in one shape or another, upon all the loans it has occasion to make. Nor does the evil end here; the same disadvantage must be sustained upon whatever is to be bought on terms of future payment.


FF: … you created revenue cutters, what later became the Coast Guard, to collect fees from ships. What were your instructions to the officers?

Hamilton: They will always keep in mind that their countrymen are freemen, and, as such, are impatient of everything that bears the least mark of a domineering spirit. They will, therefore, refrain, with the most guarded circumspection, from whatever has the semblance of haughtiness, rudeness, or insult.

Still, the conceit is clever, because Hamilton’s founding national finance ideas are embraced both by certain kinds of modern conservatives (the writers Richard Brookhiser and David Brooks, among many others) and by certain kinds of modern liberals (former Obama budget director Peter Orszag, the Brookings Institution, etc.). But Hamilton is also criticized across the political spectrum (by left-influenced historian Woody Holton, by sometime right-wing Republican strategist Kevin Phillips, etc.). Amid our current finance debates, especially regarding the purpose and legitimacy of public debt — and most immediately on the height of the federal debt ceiling — Hamiltonian finance raises questions that can spark controversy in all political quarters about debt, banking, taxes, and founding American values. Hamilton was conservative in the sense that he dedicated his policies to keeping his moneyed friends — the traditional elites — wealthy. Yet he founded institutions that led to modern liberal ideas about the role of government.

People bring heat to Hamilton. “The bastard brat of a Scotch peddler,” John Adams’ characteristically mean-spirited slam, is matched today by those who call Hamilton everything from a Tory to a fascist and condemn his national finance plan of the 1790’s as the hijacking of an economically democratic revolution supposedly intended by the patriots of 1776. Defenders, meanwhile, invoke the national financial straits that Hamilton faced, marginalize the popular finance movement he intended his measures to demolish, and pooh-pooh any casting of Hamiltonian finance as a socially regressive effort to establish an American money elite.
Anachronistic slurs like “fascist” cloud the important issues; the period American slur “Tory” does too. And despite the overlooked importance to the founding of American popular finance, and the financial elitism the framers meant to build into the Constitution, it’s possible to see the Constitution that empowered Hamiltonian finance as more aligned with the Declaration than opposed to it. Yet Hamilton’s motives and goals for the country, controversial in their time, remain controversial today, and for good reason.

Hamilton is famous for putting the country on what historians like to call sound financial footing and building confidence in what they call the credit of the United States. What those terms meant for 18th-century America was better understood by Hamilton himself than it is by many today, including some historians. To Hamilton, sound national finance meant concentrating national wealth in a small number of government-connected hands, thus enabling the financing of ambitious national projects. And good U.S. credit meant ensuring that holders of federal bonds — those government-connected high-finance men, the public creditors he hoped would invest in building the nation — could count on staying rich and getting richer by collecting their government interest payments.

To that end, rather than pay off the federal domestic debt (as he is reflexively credited with wanting to do), Hamilton was perfectly articulate about wanting to grow and finance that debt, making it an engine of national purpose. In that process, he showed the influence of his mentor, the Revolutionary War financier Robert Morris, who had recommended Hamilton to Washington for the Treasury job. Working with Morris in the 1780s, the young Hamilton had bent every effort to swelling the debt and making it federal.

Then, with ratification of the Constitution, the student succeeded where the master had failed. Persuading Congress to assume the states’ debts in the federal one, and then to fund it all, Hamilton achieved Morris’ longstanding goal of placing all public debt, much held by nationalist financiers themselves, in the hands of the national government. If there had been a debt ceiling, Hamilton would have had Congress raise it. Both new taxes and a central bank formed natural parts of that plan.

It’s hardly surprising, then, that Hamilton’s high regard for both national debt and government power in banking can run him afoul of some on the right, who see him as the founder of a big, sprawling, debt-ridden federal government meddling tyrannically in financial markets. The FrumForum “interview” puts it this way:

FrumForum: But if you’re such a liberty-minded guy, how could you have created a central bank, a predecessor to the Fed, when many conservatives and libertarians these days want to end the Fed?

Hamilton “responds” with some tepidly reasonable sounding truisms about how all successful nations utilize central banking. Those observations wouldn’t cut it with the conservative libertarians FrumForum invokes; they didn’t cut it with James Madison, many libertarians’ hero, who objected to the bank on constitutional grounds. Hamilton made the winning argument (also cited in Silber’s post) that Congress enjoys both enumerated and unenumerated powers. If Congress determines that exercising the constitutionally enumerated power to do what is “necessary and proper” in the discharge of its duties means exercising an unenumerated one and forming a bank, it can form a bank.

Hamilton thus laid out an idea about the role of the federal government that would appeal to liberals today. It’s a long, strange trip from Hamilton’s bank to the National Guard in Little Rock; that trip includes a Civil War, a bunch of amendments, and a civil rights movement, which Hamilton of course had nothing to do with. Yet with his argument about the bank, Hamilton sowed seeds for an activist vision of federal power, with national government an instrument for national good, now generally associated with political liberalism.

So Hamilton was a kind of modern liberal. But he wasn’t the current kind of modern liberal. His commitment to immense energy in the executive branch and a firm government hand in the national economy did set a founding precedent for FDR and the New Deal. But he wanted to use federal power not to improve economic equality but to distribute wealth upward and keep it there. Hamilton supporters, dismissing all criticism as caviling, perpetually celebrate their man for his brilliance and boldness in creating national stability in a difficult time. Anti-Hamiltonians may think there were better ways the young nation could and should have gone.

What if blending government activism with elite finance, and pushing back the advances of the democratic finance movement, did serve purposes critical in establishing our nationhood? All the more reason to delve into the social, political, and cultural conflicts those policies embodied and the difficult legacies they have left us.

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  1. F. Beard

    … and the difficult legacies they have left us. William Hogeland

    Those legacies are not so difficult if attacked from a moral perspective.

    We need:

    1) Restitution for the current system – government enforced counterfeiting via a government enforced monopoly money supply for private debts – to the entire US population. Debt-free United States Notes are an ideal means for that restitution. They should just be equally distributed to the entire population.

    2) Fundamental money reform including, per Matthew 22:16-22, separate government and private money supplies.

  2. Psychoanalystus

    Hamilton’s deification reminds me of that of another third rate leader this country has seen: Ronald Reagan. At the end of the day, all these people were little more than Timothy Geithners, corrupt financial gangsters dedicated to scaming the masses in order to enrich themselves and their crooked friends.


  3. attempter

    Yet with his argument about the bank, Hamilton sowed seeds for an activist vision of federal power, with national government an instrument for national good, now generally associated with political liberalism.

    It’s a twofer! Not only was the bank pernicious in itself, but it supplied the precedent for exactly the open-ended power accumulation of the central government, and the flippant disregard of the text of the written Constitution, that the wrongly called “anti-federalists” warned about. (That the truly anti-federalist centralizers managed to call themselves “federalists” and their truly federalist opponents “anti-federalists”, and make both names stick, was the first major Orwellian inversion I’m aware of in American history.)

    As for the “sound financial footing”, this reference keeps omitting the necessary context: Sound footing for what? In the Federalist papers both Hamilton and Madison are frank that not only do they despise democracy, but that they aren’t seeking to form a system dedicated to the Pursuit of Happiness, but to the pursuit of Empire. So the finance system sought, as well as everything else they advocate, has to be seen in that light.

    1. William Hogeland

      I agree that calling “Federalist” those who wanted to dismantle the federation is a good one. Something like the Bloshevik and the Menshevik.

      “As for the ‘sound financial footing’, this reference keeps omitting the necessary context: Sound footing for what? In the Federalist papers both Hamilton and Madison are frank that not only do they despise democracy, but that they aren’t seeking to form a system dedicated to the Pursuit of Happiness, but to the pursuit of Empire. So the finance system sought, as well as everything else they advocate, has to be seen in that light.”

      That’s the light I’m trying to throw on it.

  4. alex

    “What if blending government activism with elite finance, and pushing back the advances of the democratic finance movement, did serve purposes critical in establishing our nationhood?”

    That’s a fascinating question, but given that you haven’t given any indication of what the “democratic finance movement” might have entailed (other than the obvious point that it would be “something different”), there’s no fuel for debate here.

    1. William Hogeland

      This is but a single New Deal 2.0 post in a longish series largely on that very movement. If that still looks sparse, books and articles by Terry Bouton, Alfred Young, Eric Foner, Woody Holton, and many others can fill out the picture.

  5. Paul Tioxon

    William Morris, personally guaranteed loans from the French to pay for American military supplies. But one man is not a nation. And a nation, that was copied from the European model of s strong central government that could field an effective bureaucracy that could collect taxes is what was needed to go up against the Brits. Of course we know that the people who crafted the new government were the wealthy businessmen and landowners. But in order to attract the capital in critical mass to pay and equip a standing army to fight for years, a central bank, as a key component along with a nation state bureaucracy with enough tax collecting capacity to repay the debt was also necessary.

    On that basis, I am not sure you can claim Hamilton during the 1776-1787 period was just swelling the debt. Additionally, England and France as well as other European powers, were in regular conflict militarily, as well as competing economically. Bleeding your enemy’s economy by ginning up expensive wars, such as our rebellion was, was a policy by other means. In lending to the US, we were expected to pay, but only if we were to succeed. It is doubtful that France and other lenders would see any return if the Brits won. So they went all in, which was a lot of debt for us. This is how wars were paid for so as not to tax the economy into a coma. When the war was over, in order to make good on the debt which financed the entire operation, a more perfect union was adopted in in order to ensure robust tax collection and domestic commerce without petty state tariffs from border to border, such occurred even within the nation state boundaries of Europe at the time. A central bank was a hallmark of the power of France and England, so it would be here as well. Hamilton and Morris were borrowing from the successful innovations of social organization they saw in Europe, minus the king and church. And like any good American, when they saw an opportunity to make a buck out of a situation, they went for it.

    1. William Hogeland

      While Robert Morris’s personally guaranteeing loans was indeed critical to American success, it was also part and parcel of his vociferous war profiteering, which went well beyond the supposedly all-American hankering to turn a simple buck. If by “paying the army,” we’re talking about rank-and-file soldiers, that was anything but a priority for Morris: he made the officer class into public creditors — part of his and Hamilton’s announced and unabashed intention to grow the debt — but as E.J. Ferguson showed many years ago, Revolutionary soldiers went home with virtually nothing. And tax collection was not, in Morris’s and Hamilton’s own expressed opinion, intended to repay the debt but to fund it. So yes, Hamilton and Morris were indeed “borrowing from the successful innovations of social organization they saw in Europe, minus the king and church.” That’s, shall we say, the problem, for critics of their policies. (But I don’t think Hamilton, unlike Morris, was looking to make a buck out of the situation.)

  6. FatCat

    Hamilton was my kind of leader. He enriched my great, great, great, great great, great grandfather greatly.

    As such, I wish to take a moment to thank our founding fathers for establishing the great American tradition of enabling fat kittens like me to plunder and loot to my heart’s desire. Thank you!

    Fat Cat

    1. Curious Interrogator

      Hey FatCat,

      shouldn’t you be off in Africa hunting endangered species or something? What gives with this attention to business? Don’t you have lackeys to write your blog comments?

      1. FatCat

        These days I get more satisfaction out of hunting middle class Americans out of their homes, jobs, and retirement funds. It gives me great pleasure to see them crushed under my merciless oligarchic boot.


        1. alex

          “These days I get more satisfaction out of hunting middle class Americans”

          And it’s a twofer – middle class Americans _are_ and endangered species.

  7. Jim

    This Hogeland blog on Hamilton and attempter’s comment on it are, in my opinion, beginning to move toward some extremely important issues.

    Is it possible that both an ideological “progressivism” which can be traced backed to Hamilton and an ideological “conservatism” which ended up endorsing the emergence of that same massive national economic system, have together exhausted their respective capacity of explain events–with their prominent narratives now primarily functioning to obscure the probabilty that our country has taken a dramatically wrong turn.

    Is it also possible that a competing impulse(with a left and right variety) called “populism'(i.e) an endorsement of projects of decentralization and more communal practices)will become the main battleground of the future?

    But is it also possible that such a populism (of either left or right variety)lacks an ethical vision that would support such a cultural/political/financial transformation?

    One weakness of my own brand of populism is that it endorses a type of indeterminism (i.e. an endorsement of process and movement and doing)without any positive rule for the conduct of life.

    Do we need to find a way out of such liberal indeterminism in order to find truth and happiness?

    Do we somehow have to reunite freedom and truth?

    Is the liberal order itself(in some combination of market and state) which replaced the city-state, the Roman empire and the monarchy, any longer self-sufficient?

    Can external liberty and internal disposition be brought into closer alignment?

    Do we all need something to submit to?

    1. attempter

      Anarchism and direct democracy have always been founded on a moral basis. One basic principle, going back thousands of years in moral philosophy, is that human beings are ends and that anything which treats them as means (as all of today’s politics and economic policy does) is morally despicable.

      The other is that the people have the right and responsibility to rule themselves, and that only those who work have any right to the management and distribution of the produce. Again, everything we have today directly contradicts this, as both conservatism and liberalism agree that parasitic “elites” should steal this produce and then trickle some of it back down.

      The fact that corporatism is nothing more or less than robbery is first and foremost a moral fact. This is part of the triad of the condemnation, along with how irrational the structure is, and the fact that it doesn’t work on a practical level.

      Affirmatively, the morality of economic democracy would be that the purpose of society is life, liberty, and the pursuit of happiness, and that the economy must be organized to maximize these. That means the purgation of evils like property and other hoarding beyond one’s fair share based on one’s actual productive work, wage-based employment, the commodification of any commons, any policy which generates artificial scarcity. Beyond that, the moral goal is to purge all forms of exploitation and coercion, replacing them with the cooperation and freedom which are proven to prevail and to work once such exploitation and coercion is removed.

      All of this is nothing new, of course. It’s the same economic morality as that of “Do unto others as you’d have them do unto you.” More recently Kant updated this as, “Act as if your action would enshrine a universal law.” Again, these are anathema to capitalism and representative pseudo-democracy, which explicitly want to divide humanity into parasitic elites who do no work and monopolize the production, vs. the productive people who do all the work and control nothing, and receive an ever diminishing share of what only they produced.

      Our morality will restore a unified humanity by causing these criminals and their vicious ideology to cease to exist, and replacing their cesspool with a human society based on cooperation, fairness, justice, citizenship, and community.

      There, life, liberty, and the pursuit of happiness will finally be the real goals of humanity, after so much wasted time and effort and blood (not to mention the tragic squandering of the fossil fuel heritage, which truly could have been used to create something close to paradise on earth if it had been used democratically instead of for the benefit of history’s most vicious criminals).

      1. Toby

        “human beings are ends and that anything which treats them as means (as all of today’s politics and economic policy does) is morally despicable.”

        I hadn’t seen that formulation till now, and find it both elegant and powerful.

        “Our morality will restore a unified humanity by causing these criminals and their vicious ideology to cease to exist, and replacing their cesspool with a human society based on cooperation, fairness, justice, citizenship, and community.”

        The question is, how? Some morality is fundamental to us, much is not. I take it we simply leave space for people to be, but which morals are fundamental, which temporal? And you say “restore”. Was humanity ever unified?

        I’m very concerned with the how, and come from the angle that a morality-based socioeconomics can only flourish if everyone on Earth is taken care of equally handsomely. I see this as a technical challenge that must be addressed globally (seen over the long term of course). But, because this equal provisioning of a basic and healthy quality of life for all cannot be insisted on by some elite or other minority, cannot be dictated but must be understood and wanted, and because technical solutions–including renewable energies, permaculture, a democratic money system–are prerequisites, we are faced with a chicken-and-egg problem. Only the correct infrastructure can generate a social space open enough to promote morality and ‘freedom,’ but only democracy can willingly implement the required infrastructure.

        In short, how do we get from our decadence-induced ignorant slumber to wakeful and informed democracy?

        1. attempter

          By unified humanity I mean classless societies where all work and all share the production. By restore I mean that prior to class stratification and parasitism, human societies contained only workers.

          Contrary to the lies of idiot shills for the system, this does not mean going back to hunting-gathering. We’ve learned enough that we can maintain a high level of agricultural production and from there civilization, but do it all on the economic democracy basis of autonomous farmers and cooperatives.

          On the chicken-and-egg question, I don’t think this can be done through reformism. It’ll take a non-linear transformation which will sweep away the filth and open up the opportunity to build this new world.

          But part of the process of seizing this opportunity will be a virtuous circle of movement consciousness we must embark upon starting now. As ever growing numbers of people understand the absolute failure and corruption of this system, and resolve to fight as hard as necessary for this redeemed morality and freedom, that will be the future demnocracy and social space already constructing themselves in principle as well as in reality wherever the flow from our spring finds grooves to run.

          So when the system collapse comes, we won’t be starting from scratch. The “infrastructure” will already exist in our minds, and can then be built rapidly for real.

          1. Toby

            Agreed, though ‘work’ and ‘worker’ might need redefining, since in their current form neither is noble. I’m very attracted, for example, by arguments which ‘fuse’ work, fun and passion. The sorts of labour we are forced to do today are most often chaff-work of less than no value to society and planet alike, let alone the humans slogging away at them.

            As I see it, the challenge lies in making sure “the starting point”, i.e. the information we share and the infrastructure we build/prepare, now, with democracy in mind, be as far above chaos and ‘Hobbesian Warre’ as possible. There is much hard-won wisdom to take with us into a new egalitarianism, including, in my opinion, the organizational capacities of corporations. Absent ossified stratification (there will always be differences in perceived value as well as in individuals’ skills and abilities) organizational structures and processes can bring people together very effectively, to some purpose. The ongoing trick will be to prevent ossification and see such structures as means rather than as ends. Which takes wisdom and vigilance. Hunter-gatherer tribes managed this, but that was small-scale. At close to 7 billion souls, we’re going to need more than teasing and rhetoric to keep the alphas from forming states all over again. I suspect it will take a global infrastructure, like the internet, to manage us, that is, to provide the support structures we’ll need to manage ourselves sustainably. Time will tell what form that infrastructure will take, but I do believe we’re going to, at the very least, have to stay in close contact with one another.

  8. rick

    It’s time to act. Enough talk. If you don’t know what to do, follow me. Don’t just make a difference – Make a Change!

    Read “Common Sense 3.1” at ( http://www.revolution2.osixs.org )

    We don’t have to live like this anymore. “Spread the News”

    1. FatCat


      I am very disappointed by your attitude. How dare you raise your voice against me and incite my slaves to rebellion. I shall not tolerate dissent. I have already advised my friends at JP Morgan, Citibank, BofA, to track you down and foreclose on your and all your relative’s homes and throw you in the street, where you belong. Additionally, as of tomorrow you are unemployed, but you shall not be granted unemployment benefits because you obviously quit…LOL

      I repeat: I shall not tolerate dissent among my slaves!

      Fat Cat

      1. alex

        My Dearest and Most Majestic FatCat,

        ‘Slave’ is such a harsh word. I believe the preferred term these days is ‘associate’. Fear not though, for the change is only in terminology.

        1. FatCat

          Thank you, Alex. I like the way you think.

          Indeed, I love my “associates”… especially when I crack my whip on their backs, or when I bust their unions, or when I secretly buy life insurance on the sickest of them…LOL


  9. Nate

    Today , we have the Internet economy, there really isn’t secrets anymore.

    then there still are people who thinks they can get something for nothing because they have the intellectual or some other innate superiority. USA , just as any other empire in history, will go bankrupt !

  10. Ellen Anderson

    There was an economic (real world) foundation for expansion, fueled by banks and corporations. It was the empty continent of the US. With all of those resources available there was a surplus, first to be shared, then to be stolen.

    Now the resources are disappearing; there really is not a surplus anymore relative to the numbers of people on earth. There is only the illusion of a surplus. Once the illusion disappears the economic foundation for radical equality will be laid out for all to see. When the dust settles and there begins to be a surplus again, we can only hope that the religious precepts include at least a golden rule and a prohibition against borrowing and lending.

  11. SH

    So basically Hamilton wanted to protect bondholders (his rich friends) but in the process gave us the wonderful ability to borrow and deficit spend which we need today. Sounds like congnitive dissonance to me.

    Just to add to the confusion, instead of libertarians like James Madison, let’s think about a good ‘ol confederate decentralist like Patrick Henry. “Give me liberty or give me death.” At least he wan’t consfused.


    1. William Hogeland

      Cognitive dissonance — or perfect storm.

      And even Patrick Henry the Virginia liberty decentralist (who punished Madison’s dedication to the Constitution by making sure, when legislatures, not the electorate, chose Senators, that Madison would always be in the House) ultimately repudiated state nullification of federal law.

      1. SH

        By ultimately repudiated state nullification of federal law I’m assuming you’re saying he ratified. By the other statement, I’m guessing either Barny Frank or Ron Paul.

        I like this stuff so thanks for the post and the response.

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