Don't know and don't care if Hamilton did well. He was truly a genius with the best interests of the country at heart. Can't say that about the current bunch. He'd be appalled at what we see now, the perversion of his enduring thinking.
An excerpt from a very brief but very pithy piece follows. I suggest you read the full note, though it is long, for it sets forth Hamilton's genius beautifully:
press.uchicago.edu
Congress continually asked Hamilton, and Hamilton alone, for strategic guidance. More alarming still, Hamilton responded to such requests with alacrity. The secretary presented several monumental state papers that, when combined with the entrepreneurial talents and self-interested desires of thousands of Americans, forged a national financial system: The Report on Public Credit (January 9, 1790), The Report on the Bank (December 13, 1790), The Establishment of a Mint (January 28, 1791), and The Report on Manufactures (December 5, 1791). Taken together, Hamilton's reports were nothing short of a strategic outline for the establishment of a thriving economy rooted solidly in the bedrock of sound fiscal management, a stable monetary system, extensive short-term commercial credit, and long-term development capital. On the grandest scale, the secretary's policies helped to solidify the new government by creating incentives for wealthy individuals to invest in it, directly through ownership of its bonds and indirectly through ownership of shares in the Bank of the United States. He surmised, correctly as it turned out, that the financial system would be "the powerful cement of our Union."
In the Report on Public Credit, his first and arguably most famous report, Hamilton proposed that the new national government take responsibility for all state and national debts left over from the war. This was a truly revolutionary concept. Those $75-odd millions of obligations, which took literally scores of different forms, traded at just fractions of their face value. Few expected payments on those decade-old obligations. So why did Hamilton argue that the national government should "service" this debt? Would it not be better simply to default on it, as so many countries had done before (and since)? The fledgling United States certainly did not appear to be in a position to pay its debts. But herein lies the genius of Hamilton. Where others saw a problem, he saw opportunity. While others viewed the national debt as a threat to republican government, Hamilton believed it was "a national blessing." In addition to aligning the interests of the wealthy with those of the government, his funding plan would increase the nation's credit overseas, making it cheaper and easier for both the government and private enterprises to obtain foreign financing. Finally, funding would create a form of liquid capital that would help the economy to allocate resources more efficiently.
Making a proposal was one thing. Getting it through Congress was quite another. Americans were generally agreed that the portion of the national debt owed to foreigners, the foreign national debt, should be paid in full. They differed, however, on the best way to service or pay off those debts. The question of the national debt owed to citizens, the domestic national debt, was even stickier. Some, including Madison, wanted to discriminate against most public creditors by compensating the original holders of the debt in lieu of the current owners. Much of the national debt was composed of promissory notes given by field officers to soldiers and by commissary officers to farmers. The soldiers and farmers had often immediately sold the notes at steep discounts for cash or goods. Madison wanted to make the soldiers and farmers whole, at the expense of those who subsequently purchased the notes.
Hamilton eventually crushed the discrimination argument with his usual barrage of logic and first principles. The debt instruments were simply a species of property, the value of which fluctuated with the government's fortunes and interest rates. They were, moreover, fully negotiable instruments. In other words, exchanging them was perfectly legal. The original holders had not been coerced into selling and had received a valuable consideration for the ownership of the obligations. Only the current owners of the bonds, Hamilton concluded, could be compensated. For those who could not follow his reasoning, Hamilton offered the Continental Congressional resolution of April 26, 1783, authored ironically enough by Madison, that solemnly pledged that there would be no discrimination against those who obtained government debt in the secondary market.
Assumption of state debts, turning debts owed by the state governments into an obligation of the new federal government, proved a tougher nut to crack. Several states, notably Virginia, had demonstrated fiscal responsibility with respect to their war debts and were therefore reluctant to assume the debts of more profligate states like South Carolina and Massachusetts. More vexing still, Thomas Jefferson and James Madison led Virginia's contingent in Congress. The two men were remarkably similar but yet nothing alike. Both had been born and raised in central Virginia, just a few miles from each other in fact, within sight of the magnificent Blue Ridge. Both were uneasy slaveholders but too wrapped up in politics and theorizing to gain the wealth that would have enabled them to afford to free their slaves. Jefferson and Madison worked as a team. Alone, each would have been a formidable adversary. Together, they were almost unstoppable, as their later iron grip on the presidency proved. But the pair had one great weakness, their blind love of the Old Dominion. They fervently desired the national capital to be permanently located in their native state. Hamilton realized this, and used it to his advantage.
Herein lies one of the great deals in American political history, cut between Hamilton and the two Virginians at a dinner party. The Virginians horse-traded votes for assumption of state debts in return for removal of the capital to the shores of the Potomac in ten years time. This was a truly stunning trade made possible only by the fact that the Virginians did not know that Hamilton too sought a southern capital. (He believed that it would assist in keeping southern states in the Union.) The southerners, for their part, vowed never to trade with Hamilton again because they felt that the Treasury secretary had gotten the better of them. But they too gained from the deal. In addition to the nation enjoying a stronger economy due to assumption, three Virginia presidents, who served a total of twenty-four years, enjoyed a relatively short trip from their central Virginia plantations to the Potomac capital. |
