Looking to America’s First Financier

In a time of ever more alarming reports on the financial condition of our country, Alexander Hamilton, who did more than any other to establish America’s financial system, is a useful figure to return to. I recently read a 1931 biography of Hamilton entitled Alexander Hamilton: First American Business Man. (1) The author, an economic historian at Cornell University named Thomas Irving Warshow, focused on what he regarded as essential about his subject: Hamilton’s role in the development of the business and financial systems of the United States.

In the existing biographies of Hamilton, there is but little emphasis on this portion of Hamilton’s activities, yet it was as financier and business man that our first Secretary of the Treasury proved his immortality. For as a man, he was not noble; as a politician, he was not an eminent success; as a statesman, apart from financial measures, he was not superior. But as a business man, not in all his period was any man to match him, nor in all the years of American history can any figure dwarf him in this, his natural field. (p. ix-x)

There is something dubious about Warshow’s characterization of Hamilton as a “businessman” rather than a statesman, but his narrative does have the virtue of keeping the focus on certain highlights of his career. It is impossible not to be riveted by Hamilton’s life story. The magnitude of his role in shaping our basic political and economic institutions is difficult to exaggerate. For all those Americans who have been taught to see the Founders as “immigrants,” Hamilton’s story serves as a corrective. Born out of wedlock in the British West Indies, he was derided as a “foreigner” by enemies like Jefferson. But this misses the larger point: our founding fathers were not immigrants to this nation; they created it. Hamilton rightly is ranked among the most important among them.

When Hamilton traveled to New York in 1772 to pursue an education, he had while still a teenager already served as general manager of the largest trading operation in the West Indies. He helped to win the Revolutionary War as Washington’s military secretary from 1777 to 1781. With his essays in the Federalist Papers and active campaigning, he secured the adoption of the Constitution. As Secretary of the Treasury he engineered the federal assumption of the states’ debts from the Revolutionary War and established the first United States Bank. He planned and organized the first large business corporation in America, the Society for Establishing Useful Manufactures (S.U.M.). He was a strong proponent of strengthening manufacture through protective tariffs, a policy argued for by Patrick Buchanan and at the Economic Nationalist site. He was an instrumental proponent of the “Federalist” philosophy whose conflict with “Jeffersonian Democracy” was basic to early American politics and continues to resonate today. Were it not for the public exposure of an amorous indiscretion and his capacity for making enemies, he might have been President. Instead, he squandered his life before he had reached 50 in a needless duel with Aaron Burr.

In his zeal to grow the economy, Hamilton was too tolerant of speculation and profiteering, and a number of scandals surrounded his tenure as Secretary. Yet he did not grow rich and does not seem to have ever used his political power for personal gain. He built up a financial system that provided the indispensable precondition for industrialization: sufficient access to credit. Warshow expresses “liberal” (in the 1931 sense of the word) reservations about Hamilton’s legacy, while seeing his contribution to American industrialization as beyond questioning:

In this entire plan Hamilton accepted the principle of exploitation. With the larger social effects of his program – the consequences to the working classes, congestion of population, the entire labor problem – he did not concern himself. Political fallacy though it was, it was not in harmony with his temperament or his principles [to so concern himself]. Material splendor and power were his vision and his plan. With the singleness of purpose so necessary to the successful large man of business he blazed the path to our present-day material prosperity. Without Hamilton we might be a happier people, but not the great commercial nation. Woodrow Wilson has said of America’s first business leader: “A very great man, but not a great American.” Deficient in liberalism, indeed; but then, what great debt does industrialism owe to the leaders of liberalism? (p. 179)

Russell Kirk, while describing Hamilton’s conservative vision of a virtuous, if privileged, aristocratic class running the helm of society, makes trenchant criticisms of his industrialist and nationalist views that are somewhat germane to Warshow’s.

[H]e ignored the probability that the industrialized nation he projected might conjure up not only conservative industrialists, but also radical factory-hands – the latter infinitely more numerous, and more inimical to Hamilton’s old-fashioned idea of class and order than all the agrarians out of Jefferson’s Virginia.” (2) Kirk feels that the trends towards industrialization and centralized government would have proceeded without Hamilton’s almost fanatic encouragement, and quite possibly in a healthier manner that could have prevented the rupture of the Civil War.

Nevertheless, from the present-day perspective, Hamilton’s thinking holds plenty of value to conservatives. Many of his intuitively held positions could be tools of salvation if adopted by our present-day business and political leaders. Hamilton held that the integrity of a nation rested on its credit, and his achievement was to make United States into a nation that could be relied on to pay off its debts. His establishment of the national credit appears to have been largely squandered by the current custodians of his legacy, but it is never too late to return to common sense on these matters. We are the inheritors of Hamilton’s practicality as well as of Jefferson’s idealism, and in the end we will get done what needs to get done.

Notes

(1) Robert Irving Warshow, Alexander Hamilton: America’s First Business Man, Garden City, NY: Garden City Publishing, 1931.

(2) Russell Kirk, The Conservative Mind From Burke to Eliot (Seventh Revised Edition), Chicago: Regnery Books, 1986.

Advertisements

2 Responses to Looking to America’s First Financier

  1. Hannon says:

    Stephen,

    Whenever I hear Hamilton’s name I immediately think of the Federal Reserve Bank and the collusion between serious monied interests and government in America. Here is a brief counter view from those extremist libertarians over at Lou Rockwell’s site:

    http://www.lewrockwell.com/dilorenzo/dilorenzo151.html

    And here is a Wikipedia treatment of the Fed that is useful:

    http://en.wikipedia.org/wiki/History_of_the_Federal_Reserve_System

    Wherein we find this gem from the “Pujo hearings” of 1913:

    “If by a ‘money trust’ is meant an established and well-defined identity and community of interest between a few leaders of finance…which has resulted in a vast and growing concentration of control of money and credit in the hands of a comparatively few men…the condition thus described exists in this country today…To us the peril is manifest…When we find…the same man a director in a half dozen or more banks and trust companies all located in the same section of the same city, doing the same class of business and with a like set of associates similarly situated all belonging to the same group and representing the same class of interests, all further pretense of competition is useless…. ”

    Have you turned up any evidence in your readings that Hamilton had any philosophical scruple whatsoever? He seems to have been almost exclusively devoted to a narrow, even undemocratic fiscal vision and little else.

  2. stephenhopewell says:

    Hannon,
    This is a good question and I thank you for referring me to the DiLorenzo article, which raises some strong points against Hamilton although I think it’s tainted by an animus towards its subject. Certainly all I have read about Hamilton suggests a man single-mindedly driven by his vision of the U.S. as a world manufacturing power and I don’t know whether there exist statements by him reflecting on the possible negative consequences of his program. I feel that he is so much part of what we actually became that it is pointless to try to disown him. One might wish we had followed a different path but one also has to respect his understanding of the benefit of building up industry through protective tariffs and his brilliance in shaping a financial system that could support industrialization – which of course requires sound credit but also debt and speculation.
    Anyway, if you look at the pieces by him in Russell Kirk’s Conservative Reader you will see that he was capable of articulating sound Tory sensibilities.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: