Ihave just been looking, in the office of one of my colleagues, at portraits of Hamilton and Jefferson. The figure of Hamilton seems to be stepping forward out of the frame, while that of Jefferson threatens, for the time being, to vanish into the shadows of the background.
Recent historians and biographers, talented above others in winning the popular ear, have chosen to present individualism and democracy as the swelling note in American development. But alas! they wrote—Adams, Bowers, Chin-ard—in the New Economic Era before depression time brought in its revenges. Their musings are being laid away in lavender. It is the irony of fate that a Democratic administration so rudely disrupts their fancies.
Consider the similarities in this country’s situation a hundred and fifty years ago and at present—under the Articles of Confederation and under the dispensation of the New Deal. In both we find economic depression following a great war; currency derangement; controversy over the relative claims of state and national authority; international suspicion; restrictions upon our foreign trade; ominous conflict between creditors and debtors, between agrarians and urbanites; veterans, by many accused of being predatory, crying patriotism; and all these things, and more, contributing to nation-wide uncertainty, and all factions poised they know not whether for flight or fight.
In their situation, the distinction of the Federalists of 1786 was double. They not only arrived at a conclusion, but they set about forthwith to act upon it with vigor. Contrary to the frequent assumption that balancing circumspection is the mark of public probity, it may be ventured that the promptness with which a group comes to desperation is the sign of its political wisdom. The Federalists, of quick perception and profoundly stirred, recognized that the condition of the country was intolerable. They resolved upon a radical cure. They knew that their throw of the dice was risky enough—it would result in yielding up their shirts or winning the jackpot. To a people who had fought for liberty they were to preach restraint. To autonomous frontiers, which had breathed resentment against British monarchy, they were to give, albeit domestic, yet remote, control. The fervid rhetoric of Independence was to be brought down to the distasteful business of ways and means, more galling than the scorn of George the Third. But the Federalist column marched strongly ahead on the double quick, with no backward look.
Many men and events contributed to the conception and maturing of the Federalist purpose. Washington himself, despite well-intended but unworthy disclaimers in his behalf, was more than a steadying power. He was a driving force, accepting and assuming the r61e of party as synonymous with that of patriotism. Madison and Gouverneur Morris were brigadiers in the Federalist army, Fisher Ames proved himself more than a trumpeter. Sedgwick, Knox, Rufus King were steadily at hand. But the determining cause, if we may single out one, was the presence of Alexander Hamilton at the Annapolis Convention. A sparse and straggling attendance. A dreary outlook, matched by sopping autumn rains. Then victory from defeat—Hamilton’s call for a new constitution for American society. Randolph’s retroussage could not blur the ink in those deeply-bitten lines.
I recently held in my hand the yellowed sheets of manuscript of Hamilton’s plan for the new government, elaborated with the notes which guided his speech in the Philadelphia Convention. They betray the confidence of youth, a bold glance perhaps better in a crisis than the many eyes of Argus. Here is reckless courage—the proud and wrangling states to be sunk to insignificance, the president and senate installed for life, much of the population practically disfranchised, the scepter of taxation taken from grudging and jealous hands and lodged with the central government.
One may doubt the gratuitous surmise of several standard biographers of Hamilton that his scheme of a constitution was laid before his fellow delegates as an extreme view intended to render an effective and yet more moderate plan acceptable in their eyes. Such deception, upon such an occasion, is out of accord with all that we know of his character and methods of work. Occasionally later, in heat or haste, he employed uncandid devices, such as strictures on an opponent published under an anonymity which could not conceal their source. But in this instance he spoke deliberately and at length, near the outset of the convention before its temper could be certainly known. It is perfectly clear, moreover, that the constitution as finally agreed upon fell far short of his ideal, and that his persistent, resourceful, and successful fight for its ratification—through the “Federalist” essays and in the New York Convention—was by way of taking a half loaf rather than no bread. His last penned statement, written in the awful silence of his library the night before his death, was in perfect keeping with his original design for the plan of government. His sincerity in this major particular is an important point to be established. Afterward he accepted and even furthered compromise; but it was for the sake of others, not for himself, and not until he had first declared his own desires in the most unequivocal fashion.
Two other misconstructions of Hamilton, of greater hindrance to an understanding of his true contribution, have been universally entertained. The more vulgar is the assumption that he was the mouthpiece of property against the people, that he was the engine of the “paper aristocracy” —what Jefferson called the “scrippomony”—of large government creditors, speculators in the funds, and holders of western lands. The sinister specter of Wall Street which has stalked through the history of American party politics since, has made the popular mind sympathetic to this charge. Beard has tried to document it, and Bowers has risen to the imputation like a hungry fish to a succulent worm. This is a fatal half truth. The de-bunkers, who have torn togas from the Federalist fathers and bodied them forth in the garb of the counting house, who for public spirit have read self-interest, need themselves to be de-bunked. One of the chief of these would-be realists has found damaging confirmation in a remark of Ames in the first Congress: “I conceive, sir, that the present Constitution was dictated by commercial necessity more than any other cause. The want of an efficient government to secure the manufacturing interests and to advance our commerce, was long seen by men of judgment and pointed out by patriots solicitous to promote our general welfare.”
Such a statement, typical of scores that might be cited, is of the reverse import. The second sentence declares it. The ingenuousness of individuals among the Federalists— Wadsworth, say—may be impugned, but by and large they were envisaging America’s problem, not merely their private advantage. Their professions, exhaustively argued, brilliantly catechized, could not have been a pose.
This was particularly true of Hamilton. lie became a leader of the Revolutionary cause when his private property consisted of no more than a few worn school books. His design of throwing real power to Congress and establishing public credit took shape years before he became Secretary of the Treasury, when he was a subaltern in chilly winter quarters of the Continental Army. He was never rich, he neglected his family for the public service, and he came out of office with less than he had when he entered. Critics have ranged wide to scare up something to shoot at. They say that he was small of stature, and sought to gain inches by association with the economically powerful. They say that he was “the bastard brat of a Scotch pedlar,” and would procure respectability by a union with Betty Schuyler. Would such a man, needing to consult policy, imperil a deep-laid plot by risking the affront of an excise, and an excise plainly threatened in a first treasury report some months before it was formally recommended in a second? Would such a man plead the sanctity of British credits after the Revolution? Would he, to clear his public reputation of the insinuations of Reynolds, reverberated by precious James Monroe, go the length of blackening his private character by printed declaration of a backstairs love affair?
The second misconception about Hamilton is one which, naturally enough, in the rough and tumble of controversy, he may have come to entertain himself. It is that his emphasis was primarily political, as dramatically evidenced, for example, in his running fight with Jefferson and the lesser Republicans. This assumption has gone unquestioned since Hamilton’s time for several reasons. Hamilton functioned through political bodies and political offices — as Continental collector for New York, as member of the New York legislature, of the Continental Congress, of the Constitutional Convention, as first Secretary of the Treasury, and for many years as Federalist party leader. His correspondence and the bulk of his communications to newspapers were chiefly of a political nature. His foil, Jefferson, was a political animal if ever there was one. Jefferson’s economics, received from Smith and the Physiocrats, was congenial to his political preconceptions, and, true to the school, was bent upon the purpose of no purpose, unless we are to regard a distaste for manufactures as against agriculture.
Hamilton as a political economist has too much escaped attention. Contributing to this, aside from the considerations just mentioned, is our habit, in the last two or three generations, of thinking of political economy as a science academically cultivated, or at most as a mere appendage of government, made use of through the services of hired “experts.” Political economy, or “economics” as we say, has become, in common acceptance, increasingly private in nature, descending too often to the corrupted denotation of strategy for the acquisitive business enterpriser. But at the outset of our government, and for long after Hamilton’s death, there was not one academic economist in the United States, and there were few men of letters who made pretension to an accurate knowledge of the subject. Political economy had its origin, as there is reason for wishing it had had its career, in the study of problems, social in character, essential to the constructive exercise of statecraft.
Political economist in this true historical sense Hamilton was, just as were Petty, Colbert, Hume, Quesnay, Turgot, Smith, Malthus, Ricardo. Legal statute and economic principle were generally closely joined in his mind. It is not too much to say that the former was but a vehicle for the latter. His early letters to Robert Morris and Duane, and his great reports to Congress at the beginning of (it may almost be said they gave a beginning to) the government, are only the most explicit evidence of this. Economic policy was implicit in most that he wrote, said, and did. Examination of all of his opinion—and there is a vast deal of it—reveals the coherent character of his economic thinking. If this were not enough, constructive proof is to be found in the acknowledgments of members of the Nationalist school who followed him at the distance of a generation.
His economic role was original. He made a nation. Having much in common with the Mercantilists, he was the first, or certainly the first in this country, to enter a vigorous dissent from the laissez-faire pronouncements of Adam Smith. This dissent, and the elaboration of it, forms his claim to distinction as an economic theorist.
At a time when the economic world was hushed in the conviction of the universal validity of the Scotchman’s prescription of individualism, Hamilton grasped the fact, later developed by Mathew Carey, John Rae, List, and others, that the nation as an economic entity forced itself between the individual and the world of individuals. Economic principle, he saw, was relative to time and place, and was not absolute like the stars in their courses. Applied to America, this meant recognizing the secret of collective action for economic ends. In addition to his revolt against the individualists, he made an advance over the Mercantilists in his optimism. Confronting an unexploited continent, his imagination rose to the potentialities of the American people. Wealth to him was something more than an aggregate of goods. National wealth lay in the building of national power. And even more important than capital was the inducement of economic capacity. Consider not only the specific example of his insistence upon protection to young manufactures, but his passion for order, in which alone economic aptitudes could grow. Credit must be established abroad and at home, and agencies must be provided—through honest banking, full utilization of funding, and a dependable currency—for the expansion of credit. Genet, wafting winds of revolution when what we required was peace, must be dismissed; our neutrality in the European conflict must be declared; the Jay treaty, though it produced wry faces, must be swallowed at a gulp. Like hungry Russia, exporting food that she may buy power dams and tractor plants, America must put aside the prideful promptings of the moment in order that she might enjoy blessings in the future. The dominance of the national government over the quarreling states was to the same end of peace and efficiency. Persistent critics of the central administration, whether Democratic Societies or captious editors, must be discountenanced, though at some cost to the creed of liberty, because they imperiled the all-important public confidence. Whiskey rebels, not yielding to conciliation, must be crushed. Further to promote collective action, Hamilton wanted a denser population, and was thus opposed to the early spread of settlers from the strip of eastern seacoast.
It was because of his desire for an element of cohesion in a disordered and undeveloped society that he turned to the merchants, the manufacturers, the fund holders—in a word, to men of means. It is mistaken to suppose that they used Hamilton. Hamilton used them. If he made himself in instances the immediate representative of this faction, this was a device, and his purposes embraced much more than narrow business objectives. On the vigorous stock of American life he would graft the bud of national achievement; this he found in the only group which could spring to a program.
It is not altogether fanciful to attribute importance to the fact that Jefferson had “a local habitation and a name,” while Hamilton was not so endowed. Jefferson’s ten thousand acres and his beloved house that overlooked them—the first endeared as patrimony, the second enshrined as his own creation—drew him with a fatal affection. Hamilton, on the other hand, born on a speck of an island, abandoned by his father, orphaned by the early death of his mother, came upon our shores a waif; thus detached (forever, as it turned out) from his unhappy origins, he adopted the whole country for his home. When Jefferson, in familiar correspondence, spoke of “my country,” he meant Virginia, or, mayhap, even Albemarle County. On the heels of the Declaration of Independence, the struggling nation called him to guide the too uncertain course of Congress, but he must away from the capital at Philadelphia to represent a handful of frontiersmen in the Virginia legislature. Another Virginian, for five bitter years to lead armies in the field, loved his home no less. While Hamilton was stealing time from Washington’s busy correspondence to plan and urge national economic and political reforms, Jefferson was content to codify Virginia’s laws, to describe the fauna and flora of his state, and to apostrophize the Natural Bridge and Harper’s Ferry. I do not forget the abolishment of primogeniture and entail, and the Statute for Religious Freedom, but, while the one was useful to democracy and the other was a chief ornament of the democratic faith, both were, in the then juncture of American affairs, heaven help me, works of supererogation.
Jefferson’s localism, for all the fact of his foreign travels and his later extension of the national domain, predisposed him to the view of his Physiocratic friends and of Adam Smith that the universe is the sum of individuals in it, and set him against those restraints and coercions which the Federalists felt to be necessary in the transition stage between primitive occupation and national maturity. Jefferson’s ideal of the fullest, safest, freest life for the common man was not so different from that of Hamilton. The means to the end were radically distinguished. Indeed, Jefferson presented no means except an open field in which individual impulse could express itself, favored by educational facilities and a minimum of policing by the state. Like Robert Owen with his New Moral World, he had dreamed his dream, and was impatient to have it come true. That Americans were first to endure a tutelage was to him an obnoxious proposal, carrying affront to all he held dear. He had read Locke not wisely but too well. Jefferson did not want government used for private advantage; this was well enough as a general insistence, but he failed to understand that it could and must be used for public advantage. Two major features of the process of social growth are the division of labor and the integration of industry; the second is the necessary counterpart of the first, and it was the imperatives of association which never struck home to Jefferson’s mind, A host of apparent or partial refutations of this statement rises to one’s recollection as he recalls acts of Jefferson’s public career, but the generalization holds. Hamilton saw that government is the highest expression of social responsibility, the best means of inducing collective action. Subsidiary organizations within the society, according to occupation or religious and cultural interest, are essential to buoy and direct government. In Hamilton’s time there were almost none of these except organizations of business men— and these pretty new and undisciplined—which could be used in putting governmental processes to work.
Jefferson’s assumption that government was a threat and not an aid to the individual made him and his followers, during the first three (Federalist) administrations, obstructionists. Their ingenuity went lengths which call their sincerity in question. Their fault was in crying up rights when the problem in hand was to provide a basis for the enjoyment of rights. The Hamiltonians they called wicked materialists, but the blade and then the ear must come before the full corn in the ear. The obstructionism of the Jeffersonians has no better example than their call, in the winter of 1793, for complete reports on the complicated operations of the Treasury, a call which, shame to relate, they believed Hamilton would not be able to respond to before the end of the session of Congress, so that, anyhow during the recess, he would be under the imputation of corruption or at least failure. This design was not only ignorant and unfeeling, but it was calculated to steal effort from the constructive work of the Treasury which at that time was of critical importance to the welfare of the country. Nothing less than the unique skill of Hamilton and the perfect devotion of Wolcott, working between the shafts, could have pulled the treasury cart out of the hole in which the supposed guardians of the public interest had sought to mire it.
Project the curves of thought of Jefferson and of Hamilton and consider which coincides more closely with the facts of American social development. Has dispersion or concentration proved more powerful? Have our major tendencies been centrifugal or centripetal? Have we been individualized or standardized? The world over, has the separate citizen preserved his autonomy, economic and political, or has he yielded it up to central authority?
With respect to American economic life we have been arrested by the showing of Messrs. Berle and Means of the length to which concentration of wealth, and thus industrial and social control, has gone. The two hundred largest non-banking corporations, with assets of a hundred million dollars or more each, control almost half of the total industrial corporate wealth of the country—almost as much as the other three hundred thousand non-financial corporate enterprises. A couple of thousand directors control twenty-two per cent of the entire wealth of the United States. The largest corporations have grown at a faster rate than their smaller companions, and their history promises no likelihood of dissolution through business elephantiasis. At the same time, the corporate method of carrying on enterprise has separated the individual owner of wealth from the control of what is his. The average stockholder has lost his economic sovereignty. It is estimated that before the depression— and the situation may not have altered since—one per cent of the country’s banks controlled forty-six per cent of the total banking resources, and two score banks in New York, one-tenth of one per cent of the total, controlled fifteen per cent of banking wealth. A quarter of a century ago, one-sixth of the factory workers were employed in establishments with a thousand or more wage earners, but after fifteen years the largest factories embraced one-fourth of the workers. Ten per cent of our factories employ seventy per cent of the factory operatives. Merger and consolidation (Dr. Willard Thorp has shown that mergers of public utilities increased in number from 22 in 1909 to 1029 in 1920) were an aggressive force in good times and prove a rescue in bad times.
Back of all this lies a long and compelling history, embracing population growth, demonstration of the economies of large-scale production, technological improvements. Before the depression the federal government had made increasing use of the implied powers discovered by Hamilton, and had warped the commerce clause and the taxing authority to meet the exigencies of expanding economic life. Forty years of experience had given the lie to the efficacy, not to say social usefulness, of the anti-trust acts.
The present depression has suddenly matured a host of latent tendencies, and has brought the federal government to the fore with a rush which embarrasses description. Hoover, the individualist warrior, was so hard pressed that he hastily put on parts of the armor of collectivism, but not soon enough to survive his wounds. Then his successor stepped on the stricken field in pretty full panoply of executive fiat. Congress took orders: in one instance, it is related, passing a bill which came in pressing haste to the clerk’s desk so interlined with Administration amendment that it could not be read to the legislators. There was no popular voice except in the fervid whisperings of universal prayer. All eyes were upon Washington, in mingled trust and fear. The sovereign states were reduced, and remain reduced, to nullities, mere lines on a map. In the first years of the government it was charged, by those who cherished the separation of powers, that Hamilton would foster executive encroachment upon legislative and judicial autonomies. But his incursions over the constitutional enclosures were mere petty poaching compared to recent invasions by the White House. Indeed, even more have new administrative agencies laid acre to acre.
Analogy was drawn earlier between the state of the country under the Articles of Confederation and at the time when Franklin Roosevelt came into office. Hamilton, seeing everywhere weakness and threatened dissolution, proclaimed the necessity of a fundamental change in the constitution of American society, and worked inveterately to bring it about. He was convinced that political separation must be replaced by centralized sovereignty, to the end that co-operation might supplant competition. He was opposed, in good part successfully, by the timid who ventured nothing more than an amendment of the Confederation, and by the short-sighted who feared that the implementing of the new government would ensconce privilege and delay or destroy democracy. Hamilton’s projection of our public life is on the way to being borne out in the event.
The courage and wisdom of President Roosevelt, similarly circumstanced, suffer by comparison with the resolution of Hamilton. In a hundred and fifty years the problem of America had become frankly economic instead of being in the first instance political. Economic competition, the drawing of industrial and financial power into irresponsible private hands, had brought us to ruin or at least to confession of failure, Hamilton witnessed a people who had won the prize of independence marching toward prostration. Roosevelt was faced by the paradox of the richest country on earth having one-fifth of its population in wretched want of the physical necessities. Hamilton struck out boldly for radical reorganization. Roosevelt has been content with opportunist modification. One dealt in principle, the other in compromise. Caution notwithstanding, a supreme fact foretells the end. It is the consolidations irrepressibly at work in American society, and in all the western world.
At this point, or earlier, many who hold with Jefferson will lose all patience with my narrative. It is precisely the industrial and financial magnates, the beneficiaries of Hamilton’s plans, they will say, who have done the country in. Disorganizing panics, distressing depressions, disquieting class antagonisms have marked the progress of capitalist concentration. I can hear the snorts of the Nashville agrarians. If we had remained atomic, a society of farmers, we would not have married penury to plenty. Our politics