Alexander Hamilton and the Presidency

Author(s): Curtis P. Nettels

Source: Presidential Studies Quarterly, Vol. 4/5, Vol. 4, no. 3/4 - Vol. 5, no. 1
(Summer/Fall, 1974 - Winter, 1975), pp. 23-25
Published by: Wiley on behalf of the Center for the Study of the Presidency and
Congress
Stable URL: https://www.jstor.org/stable/27547293
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 ALEXANDER HAMILTON AND THE PRESIDENCY
By Curtis P. Nettels
Cornell University
The publication of the writings of Alex
ander Hamilton, now in progress, helps to
direct attention to current economic con
ditions and problems. As the four years of
the Civil War account for Lincoln's place
in history, so Hamilton owes his standing,
as an historical figure, to a relatively short
time. His importance is derived, in part,
from his authorship in 1787 and 1788 of
most of the Federalist Papers. But more
important was his work in shaping the
Federalist financial program of 1789
1792. His achievements at that time tell
why his portrait appears on the ten dollar
bill and why it was said in the 1920's that
a certain cabinet member was the greatest
Secretary of the Treasury since Alexander
Hamilton. By reason of his achievements
in finance he became a symbol of sound
money and sound public credit.
The Federalist program of 1789-1792
was embodied in seven acts of Congress:
three revenue acts, a funding act, a na
tional bank act, a coinage act, and a patent
law. As Secretary of the Treasury, Hamil
ton set forth, in five great historic reports,
the purposes which animated the seven
laws and the principles which they incor
porated. Two of the historic reports dealt
with public finance; one with the creation
of a national bank; one with the establish
ment of a mint; and one?perhaps the best
known?with the promotion of manufac
tures.
Hamilton's authorship of the historic
reports and his contributions to the Fed
eralist Papers mark him as a man well
versed in the record of human experience,
as a keen and incisive thinker, as an advo
cate of extraordinary powers, and as a
genius in the art of analysing, marshalling,
and synthesizing facts and ideas. His gift
for stating conclusions in a clear, moving,
and convincing manner was unexcelled.
The Federalist financial program sought
to eliminate certain evils which plagued
the country after the Revolutionary War:
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i.e., the lack of a sound national currency,
the General Government's almost total
lack of income, the prostration of the
credit of the Union (caused by failure to
pay the public debts), and an excessive
reliance on imported manufactured goods
which drained the country of hard money.
To an extraordinary extent, the Federalist
measures alleviated the ills of the time.
They established a sound, uniform cur
rency based on coin; they promoted man
ufacturing and shipping; they endowed the
public credit with sound securities; they
provided a banking system of national
scope; and they supplied the Federal Gov
ernment with adequate revenues.
After 1792 the country?during most of
its Jiistory?adhered to the program of
national finance that is associated with
Hamilton's name?a currency redeemable
in coin; the scrupulous payment of public
debts; public securities as good as gold;
and an effective government which, sup
ported by an adequate income, spent less
in peacetime than it received from taxes.
Hamilton was active in public affairs
between 1774 and 1804. During these
thirty years he was in touch with Wash
ington?often intimately?most of the time.
What was the nature of their relationship?
Which of them exerted the greater influ
ence, when they acted together?
When Hamilton was Washington's mili
tary secretary during the Revolution
(1777-1781) his work was highly credit
able, but he was at best a high-grade as
sistant of the General, and if his career
had ended in 1783, his place in history
would resemble that of scores of worthy
patriots who served the cause honorably
but without eminent distinction.
Hamilton was not one of the architects
of the Federal Constitution. The members
of the Convention rejected his principal
proposals for a new frame of government.
As president of the Convention and as a
leader of the movement to secure ratifica
tion of the Constitution, Washington man
ifested his approval of both its general
character and its specific provisions. It is a
tribute to Hamilton's patriotism that, al
though he did not approve of the Constitu
tion as adopted, he wrote, in the Federalist
Papers, his masterly explanations and jus
tifications of its principal features. In doing
so he expressed ideas which Washington
believed in, for the General voiced his
strong approval of the Federalist Papers
and used them in his efforts to secure the
ratification of the Constitution.
A recent biography of Hamilton says
that, when he was Washington's secretary
during the Revolutionary War, he became
so familiar with the General's ideas that he
could express them without instructions.
Viewed from the standpoint of its ob
jectives and chief features, the Federalist
program was, first of all, the handiwork of
Washington. It was, in the main, a by
product of the Revolution?of the difficul
ties which the country (and the Army) had
experienced during its course and of the
disturbing conditions that existed after it
was over. No one had suffered more
severely than Washington from the evils
of a depreciating currency and the weak
ness of a government that, lacking reliable
income, had been harassed by a shattered
public credit incapable of raising money.
No one realized more acutely than the
General the necessity of a country's having
adequate revenues, a stable currency, a
sound public credit, and ample supplies of
manufactured goods. Many of the chief
features of the Federalist program had
been worked out during the War by busi
ness leaders who were associated with
Washington. Among them were two Phil
adelphia merchants: Robert Morris and
Thomas Willing. As Superintendent of
Finance during the War, Robert Morris
had devised a financial system that fore
shadowed, at many points, the Federalist
program of 1789-1792.
A highly important decision that was
made in connection with the National Bank
detracts from the idea of Hamilton's para
mount influence. The Bank was set up in
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such a way that it operated branch offices
in the principal cities of the country. Of
this arrangement Hamilton wrote: "The
whole affair of the branches was begun,
continued, and ended, not only without my
participation but against my judgment. . . .
I was not consulted."
In addition to the Federalist financial
program, the policies of Washington's first
term included measures for the benefit of
new settlements, in the upper Ohio Valley.
This interest appealed to Washington and
he devoted himself to actions favorable to
the pioneers. Hamilton, on the other hand,
esteemed particularly the landed estates
and the commercial cities of the Eastern
seaboard. Instead of seeking to further the
growth of the West, he preferred to pro
vide tenants, land buyers, and workers to
the landowners and merchants of the East.
In this sphere, the outlook of Washington
shaped the course of his Administration.
During the years 1793-1799 national
affairs revolved around the great conflict
between Britain and France that grew out
of the French Revolution. At that time, the
decisions and actions of the United States
were made with an eye to safeguarding the
order that had been created by the Fed
eralist financial program?by the need to
maintain an import trade from Britain
that supplied a great part of the Federal
Government's revenue and thereby sus
tained the public credit. Washington and
Hamilton agreed in their appraisals of the
foreign situation and acted together in sup
port of the principal measure of the era
Jay's Treaty of 1794. Because the French
regarded that treaty as hostile to them, they
engaged in a quasi-war against American
shipping.
Washington's last important action
came in 1799, when he encouraged Pres
ident John Adams to end the quasi-war
with France. This he did by informing
Adams that the American people were very
desirous of peace. In so acting, Washing
ton parted company with a pro-war faction
headed by Hamilton.
After the death of Washington, Hamil
ton's political fortunes declined, although
he acted nobly when he used his influence
to bring about the victory of Jefferson, in
1801, in the historic contest between Jef
ferson and Aaron Burr.
As Hamilton's devotion to the country
had caused him to occupy a place second
ary to Washington, so also his patriotism
moved him to help to raise his onetime
enemy, Thomas Jefferson, to the highest
office of the land.
What is the status of the Federalist fi
nancial program today? In the 1920's,
when Hamilton was referred to as the
HOOVER AND THE BANKING CRISIS
a Commentary by R. Gordon Hoxie at the Hoover Presidential Seminar, August 7, 1974.
It is an honor to be here this morning,
to come back to my home state of Iowa to
participate in some modest way in the
100th anniversary of Herbert Clark
Hoover's birth. In the interest of keeping
us on schedule, I shall focus my remarks
on the last three of the eight points of
Dr. Arthur Kemp's admirable paper, i.e.,
beginning with the period of the European
banking crisis of May 1931 and extending
to the March 4, 1933 inauguration of
Franklin D. Roosevelt in the midst of the
banking crisis.
This remains to this day a period
charged with controversy. Regrettably,
how one reads those events and interprets
them is almost entirely dependent on how
he evaluates F. D. Roosevelt and the New
Deal. In his attempt to be absolutely fair,
Dr. Kemp refers to "the Republican view"
and "the Democratic view." But the inter
pretation of those events transcends party
lines. That is why, for purposes of this
commentary, I have especially re-read the
last testament of the economist of the
Chase Bank of that period who had cam
paigned for the election of FDR. Here, of
course, I refer to Dr. Benjamin M. Ander
son, Connell Professor of Banking at the
University of California at Los Angeles.
Professor Anderson, who had been a stu
dent of John Bates Clark at Columbia,
served as the economist for the Chase Na
tional Bank from 1920-1939. During that
period, he enjoyed a close and confidential
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greatest Secretary of the Treasury of all
time, his name stood for a paper currency
redeemable in gold or silver coin and a
public debt which was kept within strict
bounds and subjected to a steady process
of payment. Does the fiat currency of
today, together with an ever-growing na
tional debt, and the failure of the Govern
ment to live within its income from taxes,
mean that Hamilton and the financial pol
icies associated with his name are now in
eclipse?
relationship not only with other bankers
but also with the members of the Federal
Reserve Board and the nation's political
leaders, especially those close to F. D.
Roosevelt. His conclusions regarding these
years, and most especially of the last four
months of the Hoover Administration, add
up to a most severe indictment of Roose
velt, reluctantly arrived at.1
In his attempt to be objective in this
paper, Dr. Kemp, who had been Mr.
Hoover's research assistant, seeks to steer
clear of this controversy. Yet the fact re
mains that Mr. Hoover, in retrospect re
garding these issues, stood by perhaps the
most severe censure one President has
ever made of another. Thus he emphatic
ally asserted regarding the events culmin
ating in March 1933: "It was the most
political and most unnecessary bank panic
in all our history. It could have been pre
vented. It could have been cured by sim
ple cooperation."2
Looking back on these events in 1948,
Professor Anderson was forced to reach
the same conclusion, writing: "policy
could not be defined unless the new elected
President would cooperate, and coopera
tion after November, 1932, despite sincere
and earnest efforts of President Hoover to
(1) See Benjamin M. Anderson, Economics and the
Public Welfare, D. Van Nostrand Company, Inc., New
York, 1959.
(2) Eugene Lyons, Herbert Hoover, A Biography,
Doubleday & Company, Inc. Garden City, New York,
1964, Page 319.