ALEXANDER THE GREAT: Alexander Hamilton

Friday, April 15, 2005

Alexander Hamilton, the first secretary of the treasury, may today be better known for his death in a duel with Aaron Burr, than for the role he played as a founder of the nascent United States. His vision of a federal, mercantile nation was in opposition to Thomas Jefferson's vision of an agrarian society. Who won this battle of ideas and why? Just what is the enduring legacy of Alexander Hamilton? Peter Robinson speaks with Ron Chernow.

Recorded on Friday, April 15, 2005

Peter Robinson: Today on Uncommon Knowledge: dueling visions of America.

Announcer: Funding for this program is provided by the John M. Olin Foundation.


Peter Robinson: Welcome to Uncommon Knowledge, I'm Peter Robinson. Our show today: Alexander Hamilton and the making of modern America--a conversation with biographer Ron Chernow. Some of our founders have achieved a larger and more enduring place in American history than others. George Washington, the father of our country, Thomas Jefferson, the author of the Declaration of Independence, John Adams, the man who fought so tenaciously for independence in the first place.

Some would argue however and indeed, Ron Chernow will argue, that it was Alexander Hamilton who had the most to do with making the America that we now inhabit. Ron Chernow's books include The House of Morgan, The Warburgs, and Titan: A Biography of John D. Rockefeller. Chernow's latest book is entitled simply Alexander Hamilton.

Title: Alexander the Great?

Peter Robinson: Two quotations. First Yale historian, Edmond Morgan, "Hamilton did not think much of the constitution he had helped to created. Two years before the duel that killed him, he wrote--he's quoting Hamilton himself now, "Every day proves to me more and more that this American world was not made for me." Now listen to Princeton President and later U.S. President, Woodrow Wilson, Hamilton was "a very great man but not a great American." Great man but not a great American, uncomfortable with this society he called into being. How do you reply to those observations of Hamilton?

Ron Chernow: Well, I always thought that Woodrow Wilson thought it very, very odd because Hamilton was the man more than anybody else who forged the basic building blocks of the American government. I think aside from George Washington, nobody did more to weld these thirteen squabbling states into the powerful, unified nation. He created the great bulk of the federal government from scratch. So I think that to denigrate Hamilton because he was the one fan who came from outside of the United States or from outside of the North American colonies is a bit of a low blow.

Peter Robinson: But are they onto something? Are they spotting something in his makeup that he didn't feel comfortable--he felt--well he felt at ease in New York but somehow he didn't feel comfortable in the country as a whole? How do you--there's something there, isn't there?

Ron Chernow: Yes. Yes, they are. And I think that what it is is that I think we feel as Americans that optimism goes with the territory. There's something glandular about that kind of faith. We hear that music, that optimistic music. We hear it with Jefferson. We hear it with Teddy Roosevelt. We hear it with Woodrow Wilson, Franklin Roosevelt, Ronald Reagan. Hamilton was perhaps more European, more pessimistic, more down beat about human nature in general. And I think that this owes something to the fact that he grew up in the Caribbean. He grew up on two islands, Nevis and St. Croix that were dominated by slavery, dominated by sugar plantations, I think was exposed to an enormous amount of brutality as a child, experienced enormous amount of brutality himself as a child. So the fact that he ended up with a darker and more despairing vision that we tend to associate with American politicians is perhaps not surprising.

Peter Robinson: You write Hamilton, "embodied an enduring archetype, the obscure immigrant who comes to America, re-creates himself and succeeds despite a lack of proper birth and breeding." Tell us how he gets from the Caribbean to America.

Ron Chernow: Okay. He spends a third of his life in the Caribbean. He is an illegitimate orphan kid born on the British Island of Nevis, spends his adolescence on St. Croix. His father deserts the family when he's eleven. His mother dies of tropical fever. At 13, he's farmed out to first cousin who commits suicide a year later. He is an orphaned, impoverished, frustrated clerk in St. Croix when at age 17, monster hurricane hits the island. He writes for the local newspaper a description of it of such precocious eloquence that the local merchants band together to educate him at Kings College, later Columbia, in New York. And by a nice historical coincidence, he arrived shortly after the Boston Tea Party and is as an undergraduate, swept up into the American Revolution.

Peter Robinson: He arrives here at the age of 18--1773. 1777 when he's 22--this is four years later--he's aide to camp to General Washington in the Continental Army. So 18 years in total obscurity in the Caribbean and then within four years of arriving in this country, he just--it's a starburst. How did that happen?

Ron Chernow: This is like writing about Mozart.

Peter Robinson: Yes that--actually I hadn't thought of that but that's exactly right.

Ron Chernow: He's self-created. He's self-invented. Already as an undergraduate, he's writing these famous polemical essays. He's electrifying crowds with speeches. He's drilling the students in the nearby churchyard. Hamilton is the sort of person that people said within seconds you would know that he was somebody with extraordinary talent and intelligence and charm. He just radiated something special. Even while he was an undergraduate, he was appointed a captain of an artillery company. He was extremely brave. He had a special relationship with danger. He enjoyed courting danger but he did such an extraordinary in terms of drilling his artillery company that first he comes to the attention of John Jay and General Alexander McDougall then General Nathaniel Green--General Henry Knox, General Sterling and General George Washington all instantly spot something extraordinary about this young man.

Peter Robinson: One part of the enduring archetype is the immigrant who comes here and realizes what a treasure this countr--or what an opportunity he has here. So he's willing to put himself forward. There's a kind of energy that's--the way I sense it--there's a kind of energy that's released when he gets to this country.

Ron Chernow: Well absolutely. When he…

Peter Robinson: He takes nothing for granted that other people would tend to.

Ron Chernow: That's it but when he's in the Caribbean he's trapped on a rung. He's trapped on a very low rung without any possibility in that static society of ever escaping. Whereas what happens here, he's intoxicated with the sense of infinite possibility--not only because he is in North American but in a revolutionary situation. The old order is swept away and there is an urgent need for talented people and an urgent need for original thinkers. That's why somebody like Hamilton who at a later period in history might have had an endowed chair at a university, maybe would have been a biotech executive, maybe he would have been doing LBO's. At that moment, if you were an original political thinker as well as a great organizational mind, it was the one moment when you were likely to be swept right into the center of events.

Peter Robinson: Next, Hamilton and Jefferson and the struggle to define a new country.

Title: Oh Say Can You See

Peter Robinson: At the Constitutional Convention and during the ratification controversies that follow and indeed throughout the presidencies of Washington, Adams and Jefferson, the animating struggle in American politics lies in the tension between two visions of the new country and what it ought to become. Hamilton, on the one hand, Jefferson on the other. Give us a brief version of those two competing visions.

Ron Chernow: Two competing visions. Okay. Jefferson wanted an America that would be a nation of yeoman farmers, an agrarian Eden, would have strong states and very weak central government. He believed in strict instruction of the Constitution, limited government and wanted the House of Representatives to be the major body in the federal government. Hamilton had a vision of a bustling, diversified economy would not only have traditional agriculture but manufacturing, stock exchanges, banks, corporations, wanted weak states, strong federal government. Within the federal government, he saw it being led by a vigorous president. He didn't think that the House of Representatives was cut out for leadership and favored a very broad interpretation of the Constitution. Jefferson saw living on small farms in villages. Hamilton had a vision of great cities.

Peter Robinson: You describe Jefferson's vision--I'm quoting you now--"a fantasy of America as an agrarian paradise with limited manufacturing. He thought that agriculture was egalitarian while manufacturing would produce a class conscious society." Now I'm bound to ask you aren't you and wasn't Hamilton being a little hard on Jefferson? Isn't it accurate to say that the great bulwark of the Athenian democracy with the modest landholders and the yeoman farmers in Britain contributed to the steps toward liberty? It was plausible what Jefferson was arguing was it not?

Ron Chernow: Well, I think that it was a fantasy even then because…

Peter Robinson: Really?

Ron Chernow: …well the egalitarian vision very, very nice on paper, was really undercut by the reality of slavery which was, of course, the most class conscious if you will, system.

Peter Robinson: And Hamilton is an abolitionist almost from the get-go?

Ron Chernow: Hamilton is an abolitionist even when he is in the Continental Army. He champions a very audacious plan to emancipate any slave who's willing to pick up a musket for the continental cause. He co-founds the first abolitionist society. It's one of the ironies I think of his life that he was always derided as this fierce snob and aristocrat when, in fact, he had the best attitude, I think not only in terms of blacks but native Americans, Jews and a lot of other marginalized groups at the time.

Peter Robinson: Here's a puzzle that I can't quite get my mind around. By the end of Washington's presidency, indeed during Washington's presidency, Jefferson and Madison organize their supporters into a political party. The republicans, Hamilton and his supporters organize as the federal safe--political parties and the competition is personal, bitter. It's extremely rough. And what I've never understood--the country was enormous and really quite sparsely populated. Why couldn't they simply--Hamilton and the federalists be happy with the way Boston and New York and to some extent, Philadelphia are unfolding. We agrarians can attempt to build our paradise down sou--why--I don't understand why the struggle was so bitter.

Ron Chernow: Well I spent a lot of time thinking about this. You're right, it was a nation of four million people. It would have been easy enough to live and let live. I think that what we have to understand is that all of these people were schooled politically by a revolutionary situation. And the kinds of people who emerge in revolutionary situations are fiery passionate people who have exceptional skills in terms of polemics, in terms of invective--they're not people…

Peter Robinson: These are not compromises.

Ron Chernow: They're not compromises. They're fanatics. I mean, they were brilliant, glorious, wonderful fanatics but they are fanatics. And also what happens, I think, after any revolution--of course, revolution was still being made, was still being defined after the revolutionary war was over--there's always in the aftermath of a revolution the search for backsliders, a search for people who will betray the revolution. There's always this emphasis on revolutionary period which in the case of France, the French Revolution, that search for revolutionary purity will actually become blood thirsty. Luckily we avoided that.

Peter Robinson: They'll eat their young.

Ron Chernow: But they--you're right, there clearly is the most extraordinary animus that makes the politics of the 1790s look even more vicious and partisan than we're experiencing today.

Peter Robinson: On to Hamilton's years as the first Secretary of the Treasury.

Title: It's Payback Time

Peter Robinson: 1790, George Washington's Secretary of the Treasury. Hamilton issues the report on credit and writes: States like individuals who observe their engagements--that is to say, pay what they owe--are respected and trusted while the reverse is the fate of those who pursue an opposite conduct. Now in 1790, why is that such a remarkable statement?

Ron Chernow: Well when Hamilton becomes the first Treasury Secretary, we were a bankrupt nation. We had financed the revolution through borrowed money. And there were a lot of people who wanted to repudiate the debt. The debt was such enormous burden…

Peter Robinson: Who's wealthy enough to lend money to the Continental Congress? Who ponies up for the revolution?

Ron Chernow: There were rich merchants here. We had borrowed in the capital markets of Europe. We had borrowed far and wide. Hamilton decides to pay off the debt. It is so burdensome that fifty-five cents on the dollar in the 1790s will go to servicing that debt so that this was no small sacrifice. And it's very hard to get people to pay taxes if half the tax money is going to go to pay off a creditor. Hamilton early on recognized that political and military power are predicated on financial power. And that unless he could establish U.S. credit by paying off the debt, he never would become a major political and military power. And I think that he was right. And Hamilton really sets the stage for industrial development in the nineteenth century where we're very dependent upon the capital markets of London, Amsterdam.

Peter Robinson: Let me quote you to yourself again here. He faces a specific situation in which as you mentioned, a lot of people have lent money to the government. They've been given paper in return. Indeed you mentioned that revolutionary war soldiers accept IOU's as their pay, despairing of ever getting paid back. Lots of people turn this paper over to speculators for as little as fifteen cents on a dollar. So the situation Hamilton faces is--to quote you to yourself--"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 depressed government paper years earlier. The answer to this perplexing question Hamilton knew would define the character of American capital markets." Why is that question perplexing in 1790 and why was the precedent--why did he understand even then that the precedent would prove so important?

Ron Chernow: Well one thing that we take for granted when we buy stock or bond is that all of the profits or losses from buying that stock or bond will be our own. If we ever doubt that, we would never buy a stock or bond if we thought that the government could retroactively expropriate part of that money. Hamilton knew that that was an essential feature to establish for having functioning capital markets because unlike the other founders and Jefferson and Madison were constantly going we would teach the role. We would be a beacon for humanity. Hamilton, I think, with great wisdom and modesty, very closely studied the precedents of England, France, Holland, countries that already had functioning capital markets. Even though he never set foot in Europe, he did a very, very close study of how their financial markets operate and realized what we call the portability of a security. If you buy a stock or bond and then it is yours lock, stock and barrel. He understood that from studying European experience.

Peter Robinson: You mention that the report on credit faces a second quandary whereas some of the debt was owed by the federal government, some was owed by the thirteen states. Again I quote you to yourself, "The repercussions of the way Hamilton handled the states' debt was pervasive as anything Alexander Hamilton ever did to fortify the United States government." Why?

Ron Chernow: See this is--this sounds very technical if not counter-intuitive that the first Treasury Secretary that he not only wants to pay off the federal debt. He wants to actually add to the debt by taking over the debt from the states. Why would he voluntarily do that? Well he was very afraid about the survival of the federal government and he knew that if the creditors transferred their allegiance from the state government to the federal government, that they would have vested interest in the survival of that government. He also knew that it would forever after give the federal government the moral if not legal lock on the main revenues in the country. It's why to this day, we still pay more in federal taxes than we do in state or local taxes. For better or for worse, that's Hamilton.

Peter Robinson: Next, Hamilton's battle for the creation of a national bank.

Title: Bank Shots

Peter Robinson: After issuing the report on credit, he's still Treasury Secretary and he begins to agitate to the establishment of a national or a central bank. Why is that politically difficult? What sort of opposition does he run into?

Ron Chernow: Well for starters, Jefferson and Madison claim that a national bank is unconstitutional because they said that the only powers that the federal government could exercise were those that were specifically enumerated in the constitution. Hamilton develops a doctrine that essentially emancipates the constitution. He says well, even though it doesn't say in the constitution that we could have a central bank, it does say that we can borrow money. It does say that we can raise taxes and, in fact, a central bank would be a means to that. And so he comes up with the so-called theory of implied powers which really frees the constitution from the straight jacket of strict instruction.

Peter Robinson: Take me through one little episode there because he uses Madison in the House of Representatives. Madison is the principal framer of the constitution. And Madison says I wrote this document. I'm telling you it does not authorize the establishment of a central bank. George Washington intellectually deferential, of course he would want--he would tend to want to defer to Madison. I think that's a correct reading of Washington. And now Hamilton comes up with something relying on the necessary and proper clause. You get to do not only what is enumerated as a power to the federal government but whatever is necessary and proper to fulfill those duties and Washington decides for Hamilton. What is going on in Washington's mind?

Ron Chernow: I think what it is is that Washington and Hamilton had gone through the experience of the American Revolution and had witnessed firsthand the problem of having a weak central government. The Continental Congress could not command men. The Continental Congress could not command money. They could only beg for money and manpower from the states. And so I think what you find is that a vision is forged among the Officer Corps in the Continental Army that almost predicts that Washington will lean towards Hamilton and also that Madison and Jefferson who did not see combat, could not see as clearly the virtues of federal power.

Peter Robinson: Washington spent all those years begging the Continental Congress to pay the bills.

Ron Chernow: He'd gone through eight years of war tearing his hair out at the, you know, the ineptitude and really the weakness or of Continental Congress.

Peter Robinson: Last, a summing up. The place of Alexander Hamilton in American history.

Title: Making a Federalist's Case

Peter Robinson: You write "Alexander Hamilton was the messenger from a future that we now inhabit." What do you mean by that?

Ron Chernow: Well the America that we resemble today much more nearly resembles Hamilton's vision. Jefferson's vision looks as poetic and as alluring as ever. This doesn't in any way correspond to the country that we inherited. So that I think that one reason among others why Hamilton was villainized was that he was an advocate of things like banks and stock exchanges, corporations, manufacturing, at a time when that seemed like very scary, futuristic stuff. So he was very much ahead of his time. We've caught up with him. So much in the American landscape that we today take for granted was very new and far-sided and hence unsettling stuff back in the late eighteenth century.

Peter Robinson: Mike Wallace, let me push you a little bit more. Mike Wallace, "The claim that Hamilton's financial program saved the country from becoming a backward banana republic is untenable. The prosperity of the 1790s and early 1800s was the result not of Hamiltonian wizardry but of the outbreak of the Napoleonic wars in 1793 which generated a massive European demand for neutral America's grain and of England burgeoning industrialization which generated a massive demand for American cotton." In other words, Alexander Hamilton was saying some of the right things and doing some of the right things but this was bound to become a great big prosperous commercial country, Hamilton or no Hamilton. How do you answer that?

Ron Chernow: Well, I think it probably would have happened but I think that Hamilton accelerated it. Let me give you an example. We talked about the central bank. One of the reasons Hamilton wanted to have what was the forerunner of the Federal Reserve Board, we had no uniform national currency. Different states produced their own notes. We have a lot of foreign coins washing around in the country. This provided us with a uniform national currency. It actually provided us with liquid capital for investment at a time when we were very rich in land and very rich in labor. So I think Mike Wallace is right. There was an overall tone. There was an overall economic backdrop that was certainly stimulative. But I think that because Hamilton early on established American credit, we were able to borrow. In fact, by the time that Hamilton left office after five years, we had gone from the global deadbeat in world finance to a country that got interest rates as low as that of any other sovereign borrower in the world. I'm not really sure that there's a parallel to…

Peter Robinson: To what extent was Alexander Hamilton if I may put it this way--if I'm reading modern terms back into the eighteenth century--that's part of the question I suppose--to what extent is Alexander Hamilton reading the ethos and skills of New York into the Virginia plantation ascendancy of the moment?

Ron Chernow: I think it's a very good question. I think that in Hamilton's writing, you could raise that kind of view, the seaport in the background. I think the fact that Hamilton whether he was in the Caribbean or whether he was in New York, there's no reason that trading port meant that he had a real kind of love for the bustle of commerce, had a real feel for foreign trade. I think that his residence in New York was quite inseparable from his vision.

Peter Robinson: You call Hamilton, "the prophet of the capitalist revolution in America in the long struggle between the agrarian and the commercial visions" which is the animating struggle throughout his life. When Hamilton dies, is he aware that he's won, that his vision will indeed prove the dominant vision?

Ron Chernow: I think he hoped so. On the other hand, one has to say that by the time Hamilton died, his main political rival, Jefferson, is in the White House and heading for a second term only to be succeeded by two terms of his next major rival in James Madison and then even John Quincy Adams and Andrew Jackson don't like... So I think that Hamilton certainly would have understood that his political base, his party the Federalists, were in decline. And so I think that he experienced some gratification for the fact that Jefferson who had bitterly criticized the central bank and other parts of the Hamiltonian program once in office had, in fact, kept much of the Hamiltonian system. So I think Hamilton realized that he's imbedded his system deeply enough into American government that he would not despair politically.

Peter Robinson: But he dies a couple of years short of the Louisiana Purchase.

Ron Chernow: The Louisiana Purchase had already occurred.

Peter Robinson: He did see that?

Ron Chernow: He did see that. Hamilton was one of the few in his party who approved of the Louisiana Purchase because even though he and many federalists fear that this would mean the creation of many new slave owning states, he realized that it was just too good a bargain to pass up. But he had rather--I think it was rather bitter satisfaction for him because Jefferson had constantly accused him of sweeping constitutional powers. And here Jefferson commits the most breathtaking act of executive discretion in American history by buying Louisiana.

Peter Robinson: Clare Boothe Luce, famous dramatist and journalist of the middle years of the twentieth century used to say that history would accord each great figure just one sentence. Washington is the father of our country. Jefferson wrote the Declaration of Independence. You've written a book this thick. What one sentence should history give to Alexander Hamilton?

Ron Chernow: He'd be father of the federal government.

Peter Robinson: Father of the federal government.

Peter Robinson: Ron Chernow, thank you very much.

Ron Chernow: Thank you.

Peter Robinson: I'm Peter Robinson for Uncommon Knowledge. Thanks for joining us.