Hamilton versus Jefferson: Commentary, Part 8

Part 7

Part 6

Part 5

Part 4

Part 3

Part 2

Part 1

There is a perception that Hamilton and the Federalists were proponents of mass concentration of power, akin to the present-day Democratic Party. Yet, Hamilton articulated precise restrictions on federal power in his confutation of Jefferson’s Opinion on the Constitutionality of a National Bank. “As Hamilton said more than once,” Holloway writes, “the federal government is sovereign only in relation to its proper objects(p. 93). Referring back to Max Edling’s thesis, the “proper objects” in question indicate the international and intraunion Constitutional mandate of an autonomous federal government complementary to the collective state governments. But, Holloway is swift to point to a critical understanding of Hamilton’s: in order for the federal government to fulfill “its objects,” it then requires the ability, or the means, of doing so. This did not signify, however, the federal government possessed unchecked authority to do as it desired, again as the Democratic Party favors; Hamilton argued for and outlined fixed limits on national power.

First, “the means chosen must be both ‘requisite’ and ‘fairly applicable’ to the ends of the powers delegated.” In other words, the means to a particular “object” must be both appropriate and relevant. Second, the Constitution unequivocally enumerates what the federal government can and cannot do and as such, is inhibited by ‘restrictions and exceptions’ that are ‘specified in the Constitution.’” Finally, once more demonstrating the Judeo-Christian influence displayed in Farmer Refuted, Hamilton makes clear there are unambiguous boundaries beyond which secular government cannot contravene. Specially, government is constrained, at the very least, by the boundaries of morality (p. 93) (Whether Hamilton trusted in the virtue, or morals, of people is immaterial; Hamilton would still contend government is constrained by such morality regardless).

There is a related query raised by this line of argumentation; namely, the nature of “sovereignty” itself. It is incredibly abstruse political theory and difficult to follow, but Hamilton’s thinking can essentially be summarized as power is divided in the United States under the Constitution. The states claim sovereignty over some matters, and the federal government sovereignty over other matters. The same logic that Jefferson proffered to place state sovereignty over federal sovereignty, as opposed to each enjoying their own “proper objects,” could as readily work in reverse, to subordinate state sovereignty to federal sovereignty (not to keep harping on current political concerns, but as we see today). Thus,

unacceptable and ultimately absurd consequences would follow from holding that sovereignty cannot be present where power is divided or limited. “To deny that the Government of the United States has sovereign power as to its declared purposes and trusts, because its power does not extend to all cases, would be equally to deny, that the state governments have sovereign power in any case; because their power does not extend to every case.” After all, the Constitution imposes limits not only on the federal government but also on the states…. If opponents of the bank were inclined to deny the sovereignty of the federal government, they would also have to deny the sovereignty of the states. Such a denial, however, resulted in an unacceptable absurdity. If division of power excludes sovereignty, then the United States would exhibit “the singular spectacle of a political society without sovereignty, or of a people governed without government” (p. 92).

Notice the distinction Hamilton makes. He is not insinuating anarchy, for anarchy is the absence of government and rule of law. No, Hamilton is communicating something so illogical it’s never occurred in history: a functioning government in that it exists and is recognized with its corresponding rule of law, yet lacking to any claim of legitimacy or right to operate over the people that recognize it as their government…. It is incomprehensible.

Therefore, so Hamilton’s response goes, Jefferson is wrong and the states cannot claim sovereignty over the federal government, or vice versa; nor are both equally illegitimate. Rather, within their respective “objects,” each has complete sovereignty. And as a result, just as “neither Jefferson nor other critics of the bank would have ventured to deny that states possess a sovereign power to erect corporations,” so too the federal government, because as was conveyed earlier, if a government possesses “proper objects,” then it follows government requires the means of ensuring those “objects” are met. Otherwise America is simply a “political society without sovereignty” or “a people governed without government.” Furthermore, it would be entirely hypocritical, self-serving, and inconsistent to apply this logic to the state governments at the exclusion of the federal government.

Fundamentally, when one considers the divide between Hamilton and Jefferson as it first fissured in earnest over the constitutionality of a national bank, perhaps the following analogy helps to clarify matters.

When Jesus commanded to perform the various corporal and spiritual works of mercy, He never prescribed a specific methodology to do so. Humanity was tasked to reconcile its rational faculties with the historical reality of Jesus, and act in each situation accordingly.

It can be argued this is not unlike how Alexander Hamilton viewed the Constitution. Hamilton concluded morality, reason, and what could be called “common sense” were to be reconciled by Americans to the guiding “teachings” contained within the Constitution, much as Catholics use the same to reconcile the teachings and historical reality of Jesus, as well as the inspired word of God contained in the Bible. The Constitution grants the federal government the power to tax, for instance, but it fails to prescribe an explicit means to facilitate taxation. On the other hand, it could be argued Thomas Jefferson was the Protestant, the sola Scriptura-ist – the “literalist.” Just as Protestants have to make an extra-sola Scriptura argument to justify sola Scriptura itself (among others), Jefferson had to make extra-Constitutional arguments to support the majority of his positions. As an example, Jefferson “sought to impose a particular understanding of the standards by which the president should decide whether to exercise the veto” (pp. 85-88 for a discussion of Jefferson and the presidential veto). Nowhere does the Constitution specify standards for a presidential veto, merely that he has the prerogative to do so; nevertheless, Jefferson attempted to make such a Constitutional argument just the same. In such instances Jefferson is operating more like Hamilton or, to stay with the analogy, a Catholic, than with what he claims to believe.

**3/23/16**

I’ve changed the title and ceased referring to these posts as “reviews” because they aren’t properly reviews. Instead, I am now calling them “Commentaries.” I will write up a more traditional, summative review once I’ve finished the book.

Hamilton versus Jefferson: Commentary, Part 5

Part 4

Part 3

Part 2

Part 1

In Chapter 4, Carson Holloway provides evidence for my claim that Alexander Hamilton desired to fulfill the Constitutional mandate of an autonomous federal government that is nevertheless complementary to the various state governments, operating exclusively within international and intraunion affairs. (I will have to wait until the next chapter to see if Holloway offers support that purported breaching of the boundary of this mandate is the cause of the political sundering between Hamilton and Thomas Jefferson.) “Hamilton did not regard the national bank merely as a technical question or a matter of ordinary policy,” Holloway contends, “but instead, like his plan to restore public credit as an essential step in fully establishing the energetic government promised by the Constitution” (p. 57).

Using Hamilton’s Farmer Refuted as our reference point once again, “civil government” is responsible for safeguarding the “absolute rights” of the “ruled.” What are examples of these “absolute rights”? “Personal liberty,” “personal safety,” “life,” “limbs,” “property,” are all explicitly enumerated by Hamilton in Farmer Refuted. But an impotent government, by definition, cannot preserve these. And so, in Report on a National Bank, Hamilton details just how a national bank meets the international and intraunion Constitutional mandate and the object of government.

First, Hamilton argues a national bank will increase available capital. “Metal currencies…have been ‘not improperly’ called ‘dead stock’ when they are used only as a medium of exchange. Locked in a merchant’s chest, they are inert and unproductive until he encounters some opportunity to use them.” On the other hand, used as capital in a bank, they “‘acquire life, or, in other words, an active and productive quality’ arising from the ‘paper circulation’ that the bank can issue on the basis of its capital’” (p. 59). Meaning, the money Grandma puts under her mattress because she distrusts banks is doing nothing for her, for you, for the economy. If, however, she places the money in a bank (checking, savings, anything), she could potentially generate interest, the bank has additional assets from which to tender loans, the economy is stimulated because people are using the bank’s assets to buy and sell goods, and on and on it goes. A little oversimplified, but Hamilton’s point is if the federal government is to be able to adequately cope with international and intraunion concerns, then there needs to be a sufficient amount of capital flowing through the country. Yes, per his Report on Public Credit, there will be occasions when seeking a loan and “buying on credit” are necessary, but those moments should be the exception, not the rule.

Next, Hamilton, always concerned with expediency, efficiency, and the unexpected, suggested that in times of “‘sudden emergencies’” it is advantageous for the national government to be able to seek resources from a single source rather than disparate entities. Any individual’s experience as well as logic should confirm this assessment. Moreover, because a government cannot die and can raise revenue via taxation, it is among the safest and surest of borrowers for a bank (p. 60). Thus, a national bank would have no justifiable reason to refuse a loan to the federal government in a precipitous crisis.

Finally, a national bank, I’m sure to everyone’s ire, facilitates ‘“the payment of taxes.’” Why? Essentially because of Hamilton’s first reason. With greater quantities of capital comes greater fluidity of currency, and also, quite literally, it means people are not carrying around cumbersome gold and silver (p 61). So not only are loans more readily available, but paper money is freer flowing, and not because a press is printing reams of it, which depreciates the value.

The very nature of all three of these justifications for a national bank qualify as either “international” or “intraunion,” or both. Taken on their respective merits, it’s hard to disagree with Hamilton that in order to have a self-sufficient federal government there needs to be an independent national bank. Ergo, for civil government to uphold “personal liberty,” “personal safety,” “life,” “limbs,” and “property,” it must, in part, have a national bank at its disposal, though not under its control, as circumstances dictate.

**3/23/16**

I’ve changed the title and ceased referring to these posts as “reviews” because they aren’t properly reviews. Instead, I am now calling them “Commentaries.” I will write up a more traditional, summative review once I’ve finished the book.

Hamilton versus Jefferson: Commentary, Part 2

Part 1

In response to George Washington’s inquiry about what the newly created republic should do with the state of its torrid finances, Robert Morris responded, “There is but one man in the United States who can tell you; that is, Alexander Hamilton” (p. 9). And so begins Chapter 2 of Carson Holloway’s Hamilton versus Jefferson in the Washington Administration. And a more auspicious beginning for both the nation and book could not be had.

Holloway deftly summarizes that, while Robert Morris was the financier of the American Revolution and one of the wealthiest Americans of the period, no one was better versed in all matters economic than Alexander Hamilton. Consequently, President Washington, exercising the wisdom and leadership qualities history has remembered him for, heeded Morris’s advice and tapped Hamilton to be the first Treasury Secretary. In this capacity Hamilton commenced his duty with his Report on Public Credit to resolve the economic catastrophe that was American finances.

What Holloway does an admirable job in is so adroitly refuting the Jeffersonian position. “Thomas Jefferson came to believe that the policies adopted pursuant to the Report had corrupted Congress and were the first step in a Hamiltonian plan to betray the founding and overturn America’s Constitution” (p. 10).

Holloway debunks this Jeffersonian posturing by stipulating Hamilton’s primary motive in writing the Report was one of prudence and statesmanship, as opposed to an ultraconservative design to undo the Constitution and create a British-style monarchy and government. (He had secondary motives of ambition – which Hamilton didn’t consider inherently wrong, particularly when it was directed toward a noble end – and educating America’s leaders and the wider public about finances and economics.) “Successfully addressing the problem of public credit required such lofty virtue, Hamilton suggested, because of the high stakes involved, both for himself and for the country” (p. 11). Just how high were the stakes?

The United States owed about $13 million to foreign lenders and about $40 million to domestic creditors. On top of this, the state governments had on their own account borrowed a total of $25 million to pay for their contributions to the war effort. The annual interest on these debts far outstripped the government’s expected annual revenues. Indeed, in terms of the debt-to-revenue ratio, American indebtedness was huge by the standards of the day. Numerically, Britain’s debt was much larger than America’s, but then Britain also commanded a much larger revenue. In terms of its ability to pay, then, America’s debt was twice as big as Britain’s. America was, Thomas Jefferson worried, not only “the youngest nation in the world” but also “the most indebted” (p. 10).

Ergo, Hamilton’s concern was for the viability of the United States. Without this stability and concomitant fiscal responsibility, the Revolution would have been in vain, the Constitution would be unmade, and all would be for naught. To support his claim, Holloway cites Hamilton’s own goal, to

promote the increasing respectability of the American name; to answer the calls of justice; to restore landed property to its due value; to furnish new resources both to agriculture and to commerce; to cement more closely the union of the states; to add to their security against foreign attacks; to establish public order on the basis of an upright and liberal policy. These are the great and invaluable ends to be secured, by a proper and adequate provision, at the present period, for the support of public credit (p. 12).

Similarly, “As the Report drew to its close, Hamilton stated his conviction that a proper provision for the public credit was ‘the desideratum towards relief from individual and national embarrassments’” (p. 13). In other words, public credit was a means of establishing American “good faith” with other nations. Under the Articles of Confederation, the ability to effectively establish good faith was untenable.

These points made by Holloway confirm my own argument here that I briefly discussed in Part 1 of the book review. The transition from the Articles to the Constitution presented a mandate to the new government to resolve the impotence and inability of the federal government to act under the old compact. Nowhere can be seen in any of this a design by Hamilton to institute monarchy. Certainly he distrusted the masses and possessed a distinctly Augustinian comprehension of humanity; yet, that is a far cry from the arch-conservative “monocrat” Jefferson, his contemporaries, and historians have depicted him as. Where is the evidence? As Holloway makes clear, Hamilton’s designs are for the good of the country, to place it on a firm foundation, and to fulfill the Constitution’s mandate.

What might be a specific example of fulfilling the Constitution’s mandate that Hamilton had in mind with his Report on Public Credit? “It is a ‘plain and undeniable’ truth, [Hamilton] held, that ‘exigencies are to be expected’ in the affairs of nations, in which there will be a necessity for borrowing.’ Even the ‘wealthiest’ countries find that ‘loans in times of public danger, especially from foreign war,’ are an ‘indispensable resource’” (p. 14). Just as in every individual’s life there comes a time when he or she will have to take out a loan or buy on credit, so too in the life of a nation. But this is impossible unless the credit of the nation is good. A nation with good credit can borrow on favorable terms, as any individual can; likewise, a nation with poor credit, assuming it can borrow at all, can only borrow on terms favorable to the lender and on terms prone to perpetuate the need to borrow. The nature of the Articles of Confederation left the credit of the federal government in shambles. As a result, this bequeathed the United States a position of weakness, both internally and externally. It was Hamilton’s intent to remedy this with the plan offered in his Report.

As part of his discussion of the importance of Hamilton’s public credit initiative, Holloway submits a juxtaposition of Hamilton, Machiavelli, and Hobbes, and concludes Hamilton does not neatly align with either thinker, but rather falls somewhere between. He reasons that Hamilton “pivot[s] decisively away from both Machiavelli and Hobbes by introducing moral considerations into his argument and by presenting them as even more important than calculations based on self-interest” (p. 19). This removes Hamilton from Machiavelli because “To speak of governments as bound by ‘immutable principles of moral obligation’ is to enter a realm far removed from that of Machiavelli’s prince, who must learn to be good, or not good as the circumstances require.” So too, Hamilton diverges from Hobbes “who held that the positive law made by the sovereign is the sole source of men’s rights, and that accordingly the sovereign is the final judge of who owns what.” Holloway’s assumption is “while Hamilton shares the Machiavellian and Hobbesian realism according to which a considerable part of politically relevant human action is driven by, and intelligible in terms of, self-interest, he nevertheless does not go all the way with them in holding that this realism alone is the basis of all genuine political knowledge. Equally worthy of the statesman’s attention are certain fundamental and unchanging moral principles that restrain self-interest and the obligation of which apparently cannot be reduced to self-interest” (p. 20).

I submit the reason Alexander Hamilton does not fit so neatly onto the Machiavelli or Hobbes template, a reason that goes unaddressed by Holloway, is Hamilton’s Judeo-Christian influence. In passing I’ve already mentioned and linked to Hamilton’s Augustinian persuasion. Holloway affirms this assessment though he does not join it to Saint Augustine. Referring to Hamilton’s outline for assumption, Holloway avers, “One might expect that upright and enlightened citizens would take some pleasure in seeing justice at least partially vindicated and the public good partially protected. But the human mind [I would substitute “human heart” for “human mind”] apparently does not work that way, or at least not often enough that the statesman could rely on such reactions” (p. 29). Put differently, Man is selfish and short-sided, incapable of rising above his petty self-interest to see the bigger picture, the long-term consequences, etc. This is an Augustinian slant that Hamilton was a proponent of and one of the reasons he was duty-bound to contest Jefferson’s vision for America’s future.

We can now add to this the uniquely Judeo-Christian concept “immutable principles of moral obligations.” When translated and set within the context of credit, this means that what is objectively good does not change based on circumstances, nor does what is objectively wrong change based on circumstances, contra Machiavelli. Contra Hobbes, property is sacrosanct and inviolable, again a uniquely Judeo-Christian acknowledgment and, in civilization, in “rule of law,” when two parties enter into contract, Hamilton acceded to the Judeo-Christian teaching both parties now have a commitment to fulfill their respective ends.

Consider Hamilton’s most famous passage from Farmer Refuted:

…the deity, from the relations, we stand in, to himself and to each other, has constituted an eternal and immutable law, which is, indispensably, obligatory upon all mankind, prior to any human institution whatever.

This is what is called the law of nature, “which, being coeval with mankind, and dictated by God himself, is, of course, superior in obligation to any other….”

Upon this law depend the natural rights of mankind…. [The supreme being] endowed [man] with rational faculties, by the help of which, to discern and pursue such things, as were consistent with his duty and interest, and invested him with an inviolable right to personal liberty, and personal safety….

Hence, in a state of nature, no man had any moral power to deprive another of his life, limbs, property, or liberty; nor the least authority to command or exact obedience from him….

Hence also, the origin of all civil government, justly established, must be a voluntary compact, between the rulers and the ruled; and must be liable to such limitations as are necessary for the security of the absolute rights of the latter; for what original title can any man or set of men have, to govern others, except their own consent….

The sacred rights of mankind are not to be rummaged for, among old parchments, or musty records. They are written, as with a sun beam, in the whole volume of human nature, by the hand of divinity itself; and can never be erased or obscured by mortal power. (TheFounding Fathers and the Debate Over Religion in Revolutionary America, pp. 28-30)

We can see in this passage humanity is answerable to a higher authority: God. And God has written into the human person a unique dignity and worth that “endows” him with “rational faculties” and an “inviolable” right to “liberty” and “personal safety” (it should be noted Hamilton was explicitly drawing from William Blackstone’s fully articulated natural law theory found in Commentaries on the Laws of England and that Farmer Refuted predates the Declaration of Independence). Because of this, secular government is answerable to God as well, and only exists so long as the “ruled” allow it, which presumably the “ruled” will, providing their “absolute rights” are secured. This is radically different from Machiavelli or Hobbes.

Holloway neglects how Hamilton’s understanding of God and natural law inspired his thinking on credit. First, private creditors have the “inviolable” right to their property. They possess the God-given privilege to expect to see what they loaned paid back, for it is ultimately their property. Second, if government receives (or assumes) a loan, it must repay the loan because failure to do so fails to secure “the absolute rights of the [ruled].” Thus, it is also appropriate for government to seek a repayment plan that is “satisfactory to the community.” “Governments must pay their debts, but they must try to do so in a way that is not harmful to the common good” (p. 33). However, if the loan in question does involve private creditors, and hence the aforementioned inviolable property, Hamilton professed government make “‘every practicable exertion’ to fulfill its ‘engagements,’ that ‘no change in the rights of its creditors’ be ‘attempted without their voluntary consent,’ and that ‘this consent’ be ‘voluntary in fact, as well as in name’” (p. 35). This appeal, according to Hamilton, should be made to the creditors’ “rational faculties” (p. 35). Again, we see the effect of Farmer Refuted.  Relatedly, if government operates as a creditor it too, like a private individual, can expect to be repaid, not because of property rights, like the private creditor, but again because government has a God-ordained decree to secure “the absolute rights of the [ruled].”

There was a great deal of ground to cover in Chapter 2. Although I did not address every detail I feel it’s time to progress to Chapter 3 and assumption.

**3/23/16**

I’ve changed the title and ceased referring to these posts as “reviews” because they aren’t properly reviews. Instead, I am now calling them “Commentaries.” I will write up a more traditional, summative review once I’ve finished the book.