Nations Must Study Alexander Hamilton’s Principles of Political Economy

Hamilton Versus Wall Street: The Core Principles of the American System of Economics
Nancy Bradeen Spannaus iUniverse, Bloomington, Indiana, 2019, 222 pp. $13.99 soft cover, $5.99 e-book.

Hamilton Versus Wall Street: The Core Principles Of the American System of Economics      By Nancy Bradeen Spannaus

A Review by Lawrence Freeman-March 28 2019

For those followers of our beloved Alexander Hamilton and for those new to his writings, this book is for you. Nancy Spannaus, in her just-released book Hamilton Versus Wall Street, makes a unique contribution to the existing volumes written on Hamilton’s political and economic thoughts.  In her relatively short easy-to-read book, she weaves together Hamilton’s revolutionary ideas on political economy that served as the pillars for the creation of the United States, their legacy in the next two centuries of America, and their influence internationally. Throughout her treatise, Spannaus also provides constructive historical analysis of the battle inside the United States to adopt Hamilton’s concepts. This book is a valuable complement to Hamilton’s economic reports and will aid those unfamiliar with his seminal texts. *

Spannaus polemically begins by countering the popular myth that Hamilton was an agent for the banks (Wall Street) against the interests of the “little man,” agrarian society and the states, as espoused by Thomas Jefferson and others.  She later devotes entire chapters to Hamilton’s opposition to the British central banking system and Adam Smith, exposing another slander which alleged Hamilton was a supporter of the British aristocracy.

Principles of Political Economy

            Unlike like other publications on Hamilton that gloss over or give insufficient attention to Hamilton’s ground-breaking concepts of banking, credit, and manufactures, Spannaus makes a great effort to elaborate Hamilton’s contributions to: “The Core Principles of the American System of Economics.”  **

All nations would benefit greatly, if their leaders and citizens studied Hamilton writings. American culture would not be at the low level it is today, if my fellow citizens had been taught Hamilton’s economic theories, which in fact were crucial to the creation of our nation from thirteen indebted, agriculturally-based colonies. Advanced sector countries that are dominated by financial systems dictated by Wall Street and the City of London, and underdeveloped nations that rely on resource extraction and farming, because they lack a manufacturing sector, could learn a great deal from Hamilton.

However, Hamilton’s thinking about economic growth was not limited to the mere production of goods. He understood for society to continually increase the productive powers of the economy, the development of the human mind was essential. Spannaus quotes Hamilton: “To cherish and stimulate the activity of the human mind, by multiplying objects of enterprise, is not among the least considerable of the expedients, by which the wealth of the nations may be promoted.” (p. 28).

Friederich List, a student of Hamilton’s philosophy in the nineteenth century, wrote that “capital of mind, capital of nature, and capital of productive matter” are all essential components to achieve economic progress. (p. 29)

Hamilton’s First National Bank (courtesy ushistory.org)

The Constitution and Public Debt-Credit

Hamilton knew that for a nation to be truly sovereign, it must possess the means to produce the physical wealth necessary to maintain the existence of its citizens and their posterity. It is no coincidence that the Founding Fathers embedded this concept in the profound Preamble to the US Constitution. As Spannaus emphasizes, for Hamilton, the importance of establishing federal credit through the creation of the National Bank, stabilizing the currency, developing the manufacturing capability of the young United Sates, and increasing the wealth of the nation through internal improvements, was coherent with the intent of the Preamble “to form a more perfect Union.”

Hamilton used the “general welfare” clause of the Preamble to justify his revolutionary idea to create a public-private National Bank to consolidate the separate states and establish a unified currency to promote national economic growth. Generations later, in the footsteps of Hamilton, Franklin Roosevelt, who studied Hamilton’s writings, would also rely on the “general welfare” clause to garner support for his New Deal and other programs he initiated to revive the U.S. economy wracked by the Great Depression.  

Public Credit, anathema today to virtually all Democratic and Republican leaders, was another key concept Hamilton fought for, knowing that private sector funds and privately-owned banks would never adequately fund a nation’s economic growth, especially for large-scale internal improvements, i.e. infrastructure.

To emphasize the unique role of public credit, Spannaus lists four exceptional periods in U.S. history when the efficacious application of government-issued credit led to a pronounced expansion of the American economy. These are administrations of Presidents George Washington, John Quincy Adams, Abraham Lincoln, and Franklin Roosevelt. (p. 55-56)

In chapter 7, the author concisely summarizes Hamilton’s outlook: “…it is the deliberate increasing of the productive powers of labor through technology, improvements in infrastructure, and the use of government power to create credit that will produce value in the economy.” (p.128) This is more than good advice that all public officials. government leaders, and informed citizens should follow to secure a joyful future for their nation.

In Africa and other underdeveloped regions of the world where nations have suffered from hundreds of years of exploitation of their natural resources, Alexander Hamilton’s wise words should be fully grasped: “The intrinsic wealth of a nation is be measured, not by the abundance of the precious metals contained in it, but by the quantity of the productions of its labor and industry.” (emphasis added p. 1)

*Hamilton wrote four major economic reports for Congress and President George Washington between January 1790 and December 1791: Report on Public Credit; Report on a National Bank; Report on Manufactures; and Opinion as to the Constitutionality of the National Bank.

**This is the subtitle of Hamilton Versus Wall Street.

Frederick Douglass: “Knowledge Unfits a Man to be a Slave”

Frederick Douglas was born a slave in the month of February 1818. He was a towering figure in the fight to end slavery in the United States and emerged as a prominent American statesman in the nineteenth century. The article excepted below rekindled my memory of the exhilaration I felt over twenty years ago when I read his autobiography: “The Life and Times of Frederick Douglas.” Douglas’ lasting contribution to all Americans (and all people of the world) was his commitment to develop his mind. By learning to read and developing his mental powers, he had already “freed” himself spiritually years before he escaped from the Maryland plantation where he was kept a slave. In fact, it was the power of his mind that gave him the physical strength to challenge his master. There is no finer example for our children (and adults) to emulate, than the great Frederick Douglas, in our commitment to educate our minds and become free. Douglas understood, once he started reading, that if he could think, he would not be slave. He came to know, as we all should, that he shackles of the mind are more powerful  than the iron shackles on the body. In celebration of this bicentennial year of the birth of Frederick Douglas let us all renew our desire to unfetter our minds by emulating this unique individual. 

Frederick Douglass: “Knowledge Unfits a Man to be a Slave”

by Nancy Spannaus

This year is the 200th anniversary of Douglass’s birth, and he is finally begun to be celebrated as the towering figure he was during the mid- and late 19th century. Douglass’s role in the movement to abolish slavery, including support for Lincoln in the Civil War, and later in the tumultuous post-war battles, showed him to be a great political leader. He famously championed the U.S. Constitution and called on his fellow African-Americans to support and enforce it. He fought for the woman’s right to vote. For many years he edited his own newspaper. He also served as ambassador to Haiti for a brief time, and remained active in politics until his death in 1895.

Frederick Douglass

But the aspect of Frederick Douglass’s contribution which I want to emphasize on this occasion is Douglass’s understanding of, and commitment to, education.  Yes, Douglass was primarily addressing black Americans in his discussion of this topic. But this man, who, despite being born into slavery, fought successfully to achieve a high degree of literacy, has much to teach all Americans (and others) about the qualifications for responsible citizenship of a republic.

Readers have ample opportunity to investigate the subject for themselves in Douglass’s several autobiographies:  Narrative of the Life of Frederick Douglass, an American Slave (1845), which became a bestseller, and was influential in promoting the cause of abolition; My Bondage and My Freedom (1855); and Life and Times of Frederick Douglass, which went through its final editing in 1892, three years before his death.

A Mind Awakening

By the age of nine, Douglass says, he was inquiring “into the origin and nature of slavery. Why am I a slave? Why are some people slaves and others masters? These were perplexing questions and very troublesome to my childhood. I was very early told by some one that ‘God up in the sky’ had made all things, and had made black people to be slaves and white people to be masters …. I could not tell how anybody could know that God made black people to be slaves.”

In 1825, Douglass, who was about eight at the time, was sent to live in Baltimore with his master’s cousin, Hugh Auld, and his wife. The move to a city, one of the major industrial and shipbuilding centers on the U.S. East Coast, was to give Frederick a chance to expand his horizons both mentally and physically. It was at the Aulds that Douglass came to a more conscious understanding of his hatred of slavery and his love of learning.

Douglass developed a passion early on for reading, a passion which, ironically, was provoked by the debased ideas of his master, Hugh Auld. Douglass called Auld’s lecture to his wife, on why she should stop teaching the boy to read, “the first decidedly anti-slavery lecture” he ever heard, and a revelation which drove him to learn as much as he could. In The Life and Times of Frederick Douglass, the great man explained:

“The frequent hearing of my mistress reading the Bible aloud … awakened my curiosity … to this mystery of reading, and roused in me the desire to learn. Up to this time I had known nothing whatever of this wonderful art, and my ignorance and inexperience of what it could do for me, as well as my confidence in my mistress, emboldened me to ask her to teach me to read … My mistress seemed almost as proud of my progress as if I had been her own child, and supposing that her husband would be as well pleased, she made no secret of what she was doing for me. Indeed, she exultingly told him of the aptness of her pupil and of her intention to persevere, as she felt it her duty to do, in teaching me, at least, to read the Bible.”

Abraham Lincoln reading to his son Tad.

What was the reaction of the presumably God-fearing, Christian slave-owner, Hugh Auld? Douglass describes it thus: “Of course he forbade her to give me any further instruction, telling her in the first place that to do so was unlawful, as it was also unsafe, ‘for,’ said he, ‘if you give a nigger an inch he will take an ell [an obsolete unit of measurement amounting to about 45 inches-ed.]. Learning will spoil the best nigger in the world. If he learns to read the Bible it will forever unfit him to be a slave.’ Apparently unaware of the rather extraordinary admission he had just made, Auld continued, ‘He should know nothing but the will of his master, and learn to obey it. As to himself, learning will do him no good, but a great deal of harm, making him disconsolate and unhappy. If you teach him how to read, he’ll want to know how to write, and this accomplished, he’ll be running away with himself.’ ”

Read: Frederick Douglass: “Knowledge Unfits a Man to be a Slave”