Saturday, July 4, 2015

Hamilton Lives

The Fourth of July is a good moment to remember Alexander Hamilton.  He died in 1804, but his name comes up constantly, even today.

Hamilton is the unlikeliest of our founders.  Born a bastard on Nevis in the Leeward Islands and orphaned young, he started work as a merchant clerk and educated himself.  Before he was 20, local gentry raised money to send him to Kings (now Columbia) College in the American colonies, the larger canvas on which he made his indelible mark.

(Think of it -- Washington, Jefferson, Madison and Monroe were Virginia aristocrats; John Adams was a New England blue-blood. In addition to irregular parentage, Hamilton was dogged all his life by the rumor, perhaps true, that his Caribbean heritage included a drop or more of African blood.)

When the American Revolution began in 1775 and Hamilton was about 21, he raised an artillery company.  Within a couple years he was an aide to George Washington, who relied on Hamilton through the establishment of our basic institutions.

After the war, Hamilton founded the Bank of New York and the New York Post, both of which endure to this day.  More important, he participated in the Continental Congress; his fingerprints are all over the U.S. Constitution, the Federalist Papers and George Washington's farewell address. He was also an ardent abolitionist.

As the first U.S. Secretary of the Treasury, Hamilton set up the Bank of the United States, precursor to the Federal Reserve.  He also battled long and hard in this position to establish a policy that is bantered about in other countries and American states to this day.

Report on the Public Credit

The war for independence, like all wars, was expensive.  Americans borrowed from France and wealthy colonists, and issued IOUs to revolutionary soldiers.  States also indebted themselves in various amounts and provided food, shelter and weapons to the Continental Army. 

By the time the country got going, the amount owed was staggering -- $79 million, including state debt and accrued interest.  Much of the debt was assumed to be worthless.  The continental dollar had dropped in value.  War bonds and IOUs often were traded at deep discounts. 

Hamilton's idea:  The United States would assume the state debts and pay off all the debt at full face value.   

According to "Alexander Hamilton," a terrific 2004 biography by Ron Chernow, Hamilton's first "Report on the Public Credit" made this case:

        "Hamilton reminded readers (of the report) that the government's debt was the 
       'price of liberty' inherited from the Revolution and had special claims on the 
        public purse.

        . . . .  "'States, like individuals, who observe their engagements are respected
        and trusted, while the reverse is the fate of those who pursue an opposite
        conduct.'  The proper handling of government debt would permit 
        America to borrow at affordable interest rates and would also act as a tonic
        to the economy."

This was a hard sell in a country populated mostly by people scratching out meager livings, particularly war veterans who had sold their IOUs for as little as 15 cents on the dollar.  

Some states, like wealthy Virginia, were not eager to help other states pay off their arrears.  The chief reason the U.S. capital was located in a section of what was then Virginia, and not New York City, was to mollify Virginians' resentment over this issue.

U.S. taxes at the time consisted of import tariffs and, later, taxes on alcohol.  Hamilton established what we now recognize as the U.S. Coast Guard to interdict smugglers along the Atlantic coastline.  Then followed regular inspections of whiskey stills in the American interior, which presumably led to establishment of the Internal Revenue Service.

Hamilton won this battle, and his intuition was right.  America's credit has been good through wars and financial panics, through the Great Depression and, more recently, the Great Recession.

Arguments over public debt continue today.  Think of Greece, of Puerto Rico, of New Jersey.  I have no idea how Hamilton, an 18th century man, would approach these situations more than 200 years later.

Other Episodes

Hamilton had a happy married life and eight children, but he was also human and was blackmailed by the husband of a woman with whom he had conducted a torrid affair.  The details were exposed in the first American political sex scandal.

He was blunt, too, and clashed constantly with Aaron Burr, the vice president during Thomas Jefferson's first term.  The two finally agreed to settle things in a duel in Weehauken, New Jersey.  
       Many believe Burr shot to kill and Hamilton aimed and shot above Burr's head.  Others think Burr shot first, striking Hamilton, and that Hamilton's shot was deflected upward as he fell to the ground.  
       Whatever. Hamilton, then 48 or 50, died a day later, on July 12,1804.

Hamilton Today

The Treasury Department announced recently that future $10 bills will include a woman's portrait, replacing Hamilton.  This has riled a number of people who say that the nation's first  Secretary of the Treasury should be the last founder whose image is removed from American currency.  I tend to agree.

The hottest Broadway ticket right now is for "Hamilton," a biographical musical based on the Chernow biography.  It was composed and  written by Lin-Manuel Miranda, whose father was born in Puerto Rico.  Miranda plays Hamilton, and African American actors are cast as George Washington and Thomas Jefferson.  The music includes rap and hip-hop numbers.
       Audiences have been captivated by the appropriation of Hamilton, the self-made outsider with an outsized historical impact, for a story that speaks to young people, poor people, minorities and immigrants in the country today.  I have bought my ticket and look forward to seeing "Hamilton" in September.

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