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.
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.