Main currents in American thought An interpretation of American literature from the beginnings to 1920
established is this--that there must be a permanent _will_.” “There
ought to be a principle in government capable of resisting the popular
current.”
Gentlemen say we need to be rescued from the democracy. But
what [are] the means proposed? A democratic assembly is to be
checked by a democratic senate, and both these by a democratic
chief magistrate. The end will not be answered, the means will
not be equal to the object. It will, therefore, be feeble and
inefficient.[315]
The only effective way of keeping democratic factionalism within
bounds, Hamilton was convinced, lay in the erection of a powerful
chief magistrate, who “ought to be hereditary, and to have so much
power, that it will not be his interest to risk much to acquire more,”
and who would therefore stand “above corruption.” Failing to secure
the acceptance of the monarchical principle, he devoted himself to
the business of providing all possible checks upon the power of
the democracy. He “acknowledged himself not to think favorably of
republican government; but he addressed his remarks to those who did
think favorably of it, in order to prevail on them to tone their
government as high as possible.”[316] His argument was characteristic:
All communities divide themselves into the few and the many. The
first are the rich and well born, the other the mass of the people.
The voice of the people has been said to be the voice of God; and,
however generally this maxim has been quoted and believed, it is
not true to fact. The people are turbulent and changing; they
seldom judge or determine right. Give, therefore, to the first
class a distinct, permanent share in the government. They will
check the unsteadiness of the second; and as they cannot receive
any advantage by a change, they therefore will ever maintain good
government. Can a democratic assembly, who annually revolve in the
mass of the people, be supposed steadily to pursue the public good?
Nothing but a permanent body can check the imprudence of democracy.
Their turbulent and uncontrollable disposition requires checks.[317]
The argument scarcely needs refuting today, although curiously enough,
it was rarely questioned by eighteenth-century gentlemen. It was the
stock in trade of the Federalists, nevertheless Hamilton was too acute
a thinker not to see its fallacy. It denied the fundamental premise
of his political philosophy. If men are actuated by self-interest,
how does it come about that this sovereign motive abdicates its rule
among the rich and well born? Is there a magic in property that
regenerates human nature? Do the wealthy betray no desire for greater
power? Do the strong and powerful care more for good government than
for class interests? Hamilton was fond of appealing to the teaching of
experience; but he had read history to little purpose if he believed
such notions. How mercilessly he would have exposed the fallacy in the
mouth of Jefferson! It was a class appeal, and he knew that it was a
class appeal, just as he knew that success knows no ethics. He was
confronted by a situation in practical politics, and in playing ignobly
upon selfish fears he was seeking to force the convention towards the
English model. He had no confidence in the Constitution as finally
adopted, and spoke in contemptuous terms of its weakness; whereas for
the British constitution he had only praise, going so far, according
to Jefferson, as to defend the notorious corruption of parliament on
the ground of expediency: “purge it of its corruption”--Jefferson
reports him as saying--“and give to its popular branch equality of
representation, and it would become an _impracticable_ government;
as it stands at present, with all its supposed defects, it is the
most perfect government which ever existed.”[318] The argument savors
of cynicism, but it is in keeping with his philosophy; the British
constitution owed its excellence to the fact that in the name of the
people it yielded control of the state to the landed aristocracy.
It was as a statesman that the brilliant qualities of Hamilton showed
to fullest advantage. In developing his policies as Secretary of
the Treasury he applied his favorite principle, that government and
property must join in a close working alliance. The new government
would remain weak and ineffective so long as it was hostile to
capital; but let it show itself friendly to capital, and capital
would make haste to uphold the hands of government. Confidence was
necessary to both, and it was a plant of slow growth, sensitive to
cold winds. The key to the problem lay in the public finance, and the
key to a strong system of finance lay in a great national bank. This,
Hamilton’s dearest project, was inspired by the example of the Bank of
England. No other institution would so surely link the great merchants
to government, he pointed out, for by being made partners in the
undertaking they would share both the responsibility and the profits.
It was notorious that during the Revolution men of wealth had forced
down the continental currency for speculative purposes; was it not as
certain that they would support an issue in which they were interested?
The private resources of wealthy citizens would thus become an asset
of government, for the bank would link “the interest of the State in
an intimate connection with those of the rich individuals belonging to
it.” “The men of property in America are enlightened about their own
interest, and would easily be brought to see the advantage of a good
plan.” Hence would arise stability and vigor of government.
Moreover, the bank would be of immense service in the pressing business
of the public debt. In regard to this difficult matter Hamilton was
early convinced that only one solution was possible: all outstanding
obligations, state and national, must be assumed by the Federal
government at face value, and funded. Anything short of that would
amount to repudiation of a lawful contract, entered into in good faith
by the purchaser; and such repudiation would destroy in the minds of
the wealthy the confidence in the integrity of the new government
that was vital to its success. It was true that speculators would reap
great and unearned profits; but the speculators for the most part were
the principal men of property whose support was so essential that any
terms were justifiable, and nothing would bind them so closely to the
government as the knowledge that it would deal generously with them.
It was true also that thousands of small men would lose by such a
transaction; but under any existing social economy the small man was
at a disadvantage, and the present state of affairs was not such as to
justify Utopian measures. To alienate the rich and powerful in order
to conciliate the poor and inconsequential seemed to him sheer folly.
The argument of expediency must prevail over abstract justice; the
government must make terms with those in whose hands lay the success or
failure of the venture.
His report on the public credit, of January 14, 1790, is one of the
significant documents in the history of American finance. It is the
first elaboration by an American statesman of the new system of
capitalization and credit developed in eighteenth-century England,
and it laid a broad foundation for later capitalistic development. To
less daring financiers of the time the public debt was no more than a
heavy obligation to be met; but to Hamilton it offered an opportunity
for revivifying the whole financial life of the nation. Let the debts
be consolidated and capitalized by a proper system of funding, and the
augmented credit would multiply capital, lower the rate of interest,
increase land values, and extend its benefits through all lines of
industry and commerce. It was a bold plan and it encountered bitter
opposition, which was not lessened by the heavy taxation that it called
for. In his tax proposals Hamilton revealed his political philosophy so
nakedly as almost to prove his undoing. His doctrine of the blessing of
a national debt smacked rather too strongly of English Toryism for the
American stomach.
A national debt, if it be not excessive, will be to us a national
blessing. It will be a powerful cement to our Union. It will also
create a necessity for keeping up taxation to a degree which,
without being oppressive, will be a spur to industry.... It were
otherwise to be feared our popular maxims would incline us to
too great parsimony and indulgence. We labor less now than any
civilized nation of Europe; and a habit of labor in the people, is
as essential to the health and vigor of their minds and bodies, as
it is conducive to the welfare of the State.[319]
A further struggle was encountered over the proposals of an internal
revenue and a tariff. In his advocacy of the former Hamilton
encountered the vigorous opposition of the backcountry. The total
lack of adequate means of transportation rendered the problem of a
grain market a chronic difficulty to the frontier farmers. The most
convenient solution lay in distilling, and so whisky had become the
chief commodity of the farmer that was transportable and brought
a cash price. In placing a tax upon distilled liquors, therefore,
Hamilton struck so directly at the economic interests of thousands of
backwoodsmen, as to bring a rebellion upon the new administration. He
knew what he was doing, but he calculated that it was safer to incur
the enmity of farmers than of financiers; nevertheless the fierceness
of the opposition surprised him, and aroused all the ruthlessness that
lay in the background of his nature. He called for the strong arm
of the military and when the rising was put down, he was angered at
Washington’s leniency in refusing to hang the convicted leaders. In
his advocacy of a tariff he was on safer ground, for he was proposing
a solution of the difficult situation confronting the manufacturers.
Something must be done to revive industry so long stagnant. The old
colonial machinery had been destroyed and new machinery must be
provided. Industrial independence must follow political independence;
and the easiest way lay in providing a tariff barrier behind which
the infant industries of America might grow and become sufficient for
domestic needs.
In his notable report on manufactures, submitted on December 5, 1791,
Hamilton showed his characteristic intelligence in his grasp of the
principles of the industrial revolution. Certainly no other man in
America saw so clearly the significance of the change that was taking
place in English industrialism, and what tremendous reservoirs of
wealth the new order laid open to the country that tapped them. The
productive possibilities that lay in the division of labor, factory
organization, the substitution of the machine for the tool, appealed to
his materialistic imagination, and he threw himself heart and soul into
the cause of industrial development in America. He accepted frankly the
principle of exploitation. He was convinced that the interests of the
manufacturers were one with the national interests, and he proposed to
put the paternal power of the government behind them. With the larger
social effects--the consequences to the working classes, congestion of
population, the certainty of a labor problem--he concerned himself no
more than did contemporary English statesmen. He was contemptuous of
Jefferson’s concern over such things. He had no Physiocratic leanings
towards agriculture; material greatness alone appealed to him; and he
contemplated with satisfaction the increase in national wealth that
would accrue from levying toll upon the weak and helpless.
Besides this advantage of occasional employment to classes having