William Hogeland

 

Recent Posts by William Hogeland

  • What Would Our Founding Radicals Have Thought About Occupy Wall Street?

    Oct 5, 2011William Hogeland

    american_colonial_flagOccupy Wall Street isn't just a threat to financial elites -- it's a challenge to lazy historians.

    american_colonial_flagOccupy Wall Street isn't just a threat to financial elites -- it's a challenge to lazy historians.

    Among other intriguing and possibly problematic features, Occupy Wall Street, now in its third week and spreading, seems to represent an inchoate attempt at reviving an American radicalism that has deep roots in our founding period. The Tea Party has of course made its own highly explicit and politically successful claim on that period. Because OWS, like the Tea Party, focuses on national economic and financial issues, the new movement offers a disquieting, potentially illuminating alternative to the Tea Party's right-wing interpretation of America's founding economic values.

    I began writing New Deal 2.0's "Founding Finance" series last winter in hopes of shining light both on the financial elitism of the famous American founders, who we often wrongly cast as pioneers (or at least half-conscious seed-sowers) of equality, and on what I see as historical tendentiousness on the part of the Tea Party, whose claims on the founding period are meant to support a low-tax, small-government, anti-debt agenda. I've tried to show that this agenda, which may or may not have its merits as policy, in no way accords with the avowed purposes of the founders across their own political spectrum from Hamilton to Madison.

    In the series, I've also tried to bring to the fore some routinely marginalized yet highly resonant 18th century economic thought, as well as the actions of those who sought to obstruct wealth concentration and make cash and credit more readily available to ordinary Americans. It's an unsettling fact that our founding democratic, economic activism was not against England but against the homegrown American investing and creditor class that was leading the resistance to England.

    I've explored that founding economic radicalism in the debtor riots and "regulations" of the late colonial period; in the overthrow of Pennsylvania during the run-up to the Declaration; in the period after victory over England, when foreclosed Massachusetts debtors, the so-called Shays Rebels, marched on the armory at Springfield; and in the early Federal period, when the so-called Whiskey Rebels of trans-Appalachia, criticizing the new U.S. Constitution on bases very different from those of antifederalist elites, went so far as to fly their own flag, hoping to launch a new, more economically egalitarian country in what was then the American West.

    Throughout those struggles, the activists' goal was to pressure and in some cases to use government to restrain the power of wealth and promote economic equality through legislation. They wanted to outlaw monopolies, build debt relief into currency, institute easy-term, small-scale government lending, and take banking charters away from crony insiders. Some wanted progressive taxation on income; some wanted what we call Social Security. Much later phenomena like the Square Deal, the New Deal, and the Great Society, which can seem hypermodern (and even, to the Tea Party, unconstitutionally anomalous), actually have deep American roots. However, those roots are not in the thinking of the famous founders -- New Dealers' claims on Jefferson possibly to the contrary -- but in grassroots, 18th century movements that, while little-known today, were of immense importance during our founding.

    So important in their day were those now-buried radical movements, in fact, that much of the famous founders' behavior can't be understood without the context of elite dedication at times to collaborating uneasily with the economic radicals, at other times to squelching them and pushing back their political advances. Many historians of the period ignore that context. Hamilton's biographers, for example, do not deem the people's movement important. Hamilton did; he spent his career trying to kill it. We therefore learn almost nothing important about Hamilton's purposes by reading his biographies. Much founder biography, and much mainstream history, operates on just such comfortably foregone, ultimately useless conclusions.

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    In place of founding radicalism, historians tend to emphasize the emergence, from the Revolutionary period through the Jackson era, of a rowdy, fluid, non-deferential, competitive America. They place developing ideas of American democracy almost solely in that 19th century context. But Thomas Paine, the best-known of the radical 18th century egalitarians, would surely have been crushed if he'd glimpsed the kind of society that passed for a democratic one in Jacksonian America.

    Paine's intensity gives both liberals and radicals a problem. It was a widely held view in the Washington administration -- and it's been widely held in more or less liberal American history ever since -- that Paine's awful experiences in the French Revolution give us cause to celebrate the failure of Paine-ite radicalism in America. Fair enough: Today, as every day, it would be wise to recall not only crimes against humanity committed by bankers but also those committed on behalf of a supposedly collective, supposedly revolutionary "People," from the French Terror to the Stalinist mass murders and well beyond.

    Still, the French Terror, which almost killed Paine, has served as a convenient pretext for exercising historical complacency about the suppression of his and others' fervently democratic visions for America in 1776. Without those visions, anathema as they were to the famous founding elitists -- anathema as they were, for that matter, to Jacksonian capitalism and are today to high-finance "neo-liberalism" -- we might never have declared independence at all.

    So from a certain historical point of view, I think Occupy Wall Street rebukes, even more sharply than it rebukes rightist Tea Party claims on the founding, a familiar and complacent history of American democracy -- especially that history's failure to confront our long struggle over the relationship between high finance and government. Occupy Wall Street may be going about things all wrong, as some on what remains of the American left have asserted. I find those assertions hard to dispute. I've been critical of what I suspect may turn out to be a cultural premium, part and parcel of objections to elitism, on intellectual sloppiness and incoherence. That mode was never adopted by the activist 18th century working class, whose objections and demands (pace the lazy snobbism of Hamilton's biographers) took the form not only of action but also of crystal-clear, deeply informed, published resolutions. The 18th century activists remind us that resolutions don't have to be handed down from above; they can filter up and be adopted by majority or by consensus.

    The very concept of "up" may be anathema to the new movement. We'll see.

    But the most honest answer to any and all objections to Occupy Wall Street may be "So what?" Criticism often comes down to no-cost fantasizing about more appealing actions that nobody has actually bothered to take. When American high finance takes over America, "occupy" is what some American people do, and have always done.

    William Hogeland is the author of the narrative histories Declaration and The Whiskey Rebellion and a collection of essays, Inventing American History. He has spoken on unexpected connections between history and politics at the National Archives, the Kansas City Public Library, and various corporate and organization events. He blogs at http://www.williamhogeland.com.

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  • Why Debt Ceilings and Balanced-Budget Requirements Violate the Original Intent of the Constitution

    Aug 1, 2011William Hogeland

    american_colonial_flagSo-called "constitutional conservatives" ignore the realpolitik of our nation's origins.

    american_colonial_flagSo-called "constitutional conservatives" ignore the realpolitik of our nation's origins.

    In a critical and entertaining portrait of the anti-tax activist Grover Norquist, the New York Times columnist Frank Bruni presented Norquist as an absolutist obsessed with forcing modern political life to conform to ideas that Norquist associates with the American founders' first principles.

    Of course, Norquist is by no means alone in taking that position. That the Constitution came into existence to keep taxes low, the federal government small, and national debt at zero is an article of faith among many who, like Michele Bachmann, have taken to calling themselves "constitutional conservatives." And faith is required to believe it, as the Norquist interview shows. To make his supposedly constitutional argument, Norquist cites the first amendment on freedom of religion and the second on the right to keep and bear arms, and then goes on to cite absolutely nothing, in either the articles or the amendments, that so much as hints at a constitutional requirement to balance the federal budget, avoid debt, tax no more than people like Norquist deem appropriate, and keep government small.

    He can't cite anything to that effect because while balancing budgets, restraining borrowing, and keeping taxes low and government small might be good goals, depending on what you mean by them, it is impossible to locate in the founding national law any requirement to accomplish them. Indeed, the reality of founding history leads to the reverse conclusion.

    The Constitution came about precisely to enable a newly large government -- a national one -- to tax all Americans for the specific purpose of funding a large public debt. Neither Alexander Hamilton nor his mentor the financier Robert Morris made any bones about that purpose; James Madison was among their closest allies; and Edmund Randolph of Virginia opened the Constitutional Convention by charging the delegates to redress the country's failure to fund -- not pay off, fund -- the public debt, by creating a national government.

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    Beginning during the War of Independence, and continuing throughout the 1780s, American nationalists committed themselves to a small class of upscale high financiers (largely identical with the American nationalists), who had bought bonds from the confederation Congress in hopes of earning regular, tax-free, 6% interest payments -- not in the Congress's crashing paper currency but in hard, cold metal or its equivalent, stable bills of exchange. Morris, Hamilton, Madison, and others believed that swelling the debt to immense proportions would make a coherent nation out of thirteen squabbling states and make that nation a player on the world economic stage. Their plan to do so depended partly on making military-officer pay a pension, thus turning the entire officer class into public bondholders -- and giving Congress new power to tax all Americans to support that debt.

    Hamilton is often reflexively presented as finding inventive ways to pay down the national debt. His real accomplishments were of course "funding and assumption" -- absorbing the states' war debts in the federal one and funding that huge obligation via nationally collected and nationally enforced taxes.

    Hence the all-important provisions of the Constitution giving Congress very broad powers to tax and acquire debt. To 18th-century American nationalists across the political spectrum -- to our founders and framers, that is, from Hamilton to Madison, from Morris to Randolph, from the financiers to the planters -- national taxing and borrowing were ineluctably connected to the very purpose of national government.

    Nobody has to like it. But the original intent of the Constitution involved sustaining and managing public debt via taxation.

    Both the articles and the amendments do, of course, limit government and restrict its power. But no ratified amendment has ever qualified Congress's power of the purse, which in the minds of the framers explicitly involved the power to take on debt and fund it. In their tweets and blogs, "constitutional conservatives" have been promoting a balanced-budget amendment with reference to the tired notion that since households and small businesses must balance their budgets (as if!), government must too. They link that economically useless prescription to the widespread fantasy that our Constitution was written, amended, and ratified for just such a purpose. The framers saw it just the other way.

    But really everybody, not just "constitutional conservatives," buys into the fantasy now. History is rarely helpful politically. It's hard to imagine liberals bringing to debt-ceiling and balanced-budget debates the painful realpolitik of our national origins, which show the Constitution existing, originally, to finance the investing class and yoke that class's interest (in every sense) to national power. Thus the Times gives the Bruni piece a headline referring to Norquist's "dangerous purity" -- as if the danger in Norquist's approach lies in a too-rigid insistence on basic principle. There's nothing purist about Norquist. Whether his ideas may be proven right or proven wrong, they are anything but originalist. Like those of Bachmann and the rest of the anti-tax right, Norquist's principles are novel, innovative, and weirdly postmodern, extra-constitutional at best.

    Stark realism about the actual founding purposes of the Constitution will always have limited use in political debate. But it would be nice, at least -- though unlikely -- if we would argue these issues on their merits, and leave the Constitution alone.

    William Hogeland is the author of the narrative histories Declaration and The Whiskey Rebellion and a collection of essays, Inventing American History. He has spoken on unexpected connections between history and politics at the National Archives, the Kansas City Public Library, and various corporate and organization events. He blogs at http://www.williamhogeland.com.

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  • Economic Conflicts of the Founding Era Dispel Tea Party Myths...and Liberal Ones, Too

    May 9, 2011William Hogeland

    american_colonial_flagLooking closely at founding-era struggles over finance challenges Tea Party history -- and some liberal preconceptions too.

    american_colonial_flagLooking closely at founding-era struggles over finance challenges Tea Party history -- and some liberal preconceptions too.

    Anything but a lost, halcyon epoch of unity and consensus, our founding era saw deep, harsh oppositions among Americans over what kind of society our independence from England was meant to bring about. Like today, the direst political oppositions devolved on the economy, and on proper uses of public and private finance. From the North Carolina Regulation of the 1760s to the Whiskey Rebellion of the 1790s, Americans struggled mightily with other Americans over economic issues.

    Though little-known, those struggles had decisive impacts on all of the famous moments in founding history. The Continental Congress's adopting the Declaration of Independence occurred in the summer of 1776 only because those among the financial and political elites who wanted American liberty made secret, common cause with radical populists who wanted American equality. The Constitutional Convention's proposing a national government in 1787 came in direct opposition to progress made by the radical democrats who promoted ordinary, working Americans over the high-finance investing class.

    So it's hardly surprising that those same struggles have critically important echoes and resonances -- if sometimes painfully dissonant ones -- for our bitterly divided politics and disastrous financial crises today.

    Yet despite constant appeals to founding values by politicians and pundits across the political spectrum, a perennial American eagerness to avoid framing our founding period in economic terms can make it strangely difficult to keep those all-important 18th-century finance issues in historical focus. The Tea Party movement, for example, has laid its claim on the founding period, and to a great extent that claim is indeed an economic and financial one. Casting the modern welfare state as a form of tyranny, in large part because of what they see as its excessive taxation, Tea Partiers invoke the famous American resistance to Parliament's efforts to raise a revenue in the colonies without the consent traditionally given by representation. Seeing founding-generation American patriots as unified against British taxation (and frequently misrepresenting the politics even of the elites they invoke), the Tea Party defines its own anti-government, anti-tax values as essential to American identity.

    The Tea Party thus edits out an alternative view of government that prevailed among the ordinary 18th-century Americans who were all-important to achieving independence. Those Americans opposed elites epitomized by the Boston merchant class, which the Tea Party, perhaps appropriately enough, so strongly identifies with. The internal struggle for American equality was as important to the founding as the high-Whig resistance to England, but the Tea Party can't deal with the populist leaders and militia rank-and-file who wrote the socially radical 1776 Pennsylvania Constitution, or the Shaysites of Massachusetts who marched on the state armory, or the so-called whiskey rebels who inspired federal occupation of western Pennsylvania. American Revolutionary patriots all, those democratic-finance leaders had ideas about government's role in ensuring economic equality that prefigured programs of the 19th-century Populists and the 20th-century New Dealers, the very programs the Tea Party wants to dismantle. Tea Party history therefore has to expunge the welfare state's roots in America's founding.

    Liberals, too, can have a problem with the economic conflicts of the founding period. Alexander Hamilton's national finance program, which Madison and Jefferson opposed with such intensity, was economically regressive. Under the influence of the founding financier Robert Morris, Hamilton made a stunningly successful effort to yoke American wealth to great national projects by beating down the popular-finance movement and promoting the interest (in both senses!) of the high-finance elites. Yet when some of today's liberals look to Madison for support in critiquing Hamiltonian finance, they come up empty. Madison's attacks on central banking represented anything but an argument for democracy and economic equality.

    In fact, the activist governing philosophy of national power that Hamilton espoused and Madison opposed gave precedent to modern liberal ideas about an energetic federal role in achieving social ends. Hamilton, not Madison, was in that sense the modern liberal, and the Hamiltonian influence on today's liberal establishment can be seen in the Brookings Institution's "Hamilton Project" and Peter Orszag's hanging of a National Gallery portrait of Hamilton in his office. That kind of liberalism makes Hamilton the author of using fervent support for Wall Street in hopes of benefiting Main Street.

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    There's another kind of liberal history, leaning economically left, that prefers to trace a pretty straight line from Thomas Paine to Thomas Jefferson to Andrew Jackson to FDR, incorporating the labor movement along the way. It thus sees democratic, labor-oriented populism as essential to American founding values and coming to fruition throughout American history. In this view, the Declaration's "all men are created equal" prophesied social progressivism (even if that's not what the signers meant by it) and the Constitution's "we the people" prophesied democracy (even if the document was specifically intended to prevent democracy). The Revolution is defined not by the split between, say, Hamilton and Madison but by the emergence of Jeffersonian and then, even more fully, Jacksonian democracy. The American people become in essence social radicals, and the development of social democracy, while embattled, becomes a natural project of America.

    One problem with that view lies in its reliance on Jefferson and Jackson as socially progressive. The New Dealers did an amazing job of reinventing Jefferson as one of their own -- they built him a monument and carved his face on the nickel and on a mountain; they put a statue of his Treasury Secretary Albert Gallatin at the front door of the Treasury (Hamilton, the department's inventor, stands around out back).  But it's pretty funny to think of Jefferson as a patron saint of federal-government, welfare-state activism, and Jefferson's attitudes about democracy are notoriously slippery and problematic. The sage of Monticello could wax romantic about small farmers, and he could get excited about radical uprisings (in Paris), but he wasn't about to invite small farmers up his hill, and giving the proletariat of the American cities access to political power -- what Paine actually helped bring about in 1776 -- filled him with disgust and horror.

    The Jackson era, too, by no means represented a triumph of the kind of economic equality espoused by Paine, Herman Husband, Thomas Young, James Cannon, and the democratic-finance populists of 1760's and 1770's. Modern forms of "consensus" history see Madison and Hamilton alike as being superseded by Jackson, who ushered in a rowdy, undeferential, dirty-boots, small-business capitalism, contrasted with the gentility shared by all of the famous founders, no matter their differences. That kind of capitalism was hardly what founding-era democratic-finance activists had in mind. The Jackson administration's assaults on central banking may be read by social-democracy historians as a dismantling, at last, of the regressiveness of Hamiltonian finance -- but what began flourishing in the Jackson era can just as easily be read as fulfilling the diverging fears of those bitter enemies Paine and John Adams. Paine, desiring to re-order the world around a economic equality ensured by strong national government, would have been terribly disappointed by the cutthroat society emerging in Jackson's America. And Adams's warnings that democracy could only lead to machines, demagoguery, and party wars over political fiefdoms might as well have been describing the American politics that began with 19th-century democracy.

    Just as in Tea Party history, which sees the American people as essentially anti-government, an act of faith is required to see the American people as essentially socially progressive (or essentially anything). Both liberals and conservatives remain riveted -- hypnotized! -- by the big-name founders, from Madison to Hamilton to Adams to Jefferson to Washington to Franklin (with Paine sometimes thrown in because of "Common Sense,"); they therefore remain locked in a fight over what those founders would or would not have supported today. Widening the lens to include the more ordinary likes of Cannon, Young, Husband, Christopher Marshall, Timothy Matlack, Robert Whitehill, and William Findley, among others who opposed American financial elitism in the Revolutionary era, challenges all sides of today's political debate. Bearing down on the painful fact that a struggle over money, not ideas, marked every significant moment during the American founding can help enable new thinking about our struggles today.

    The founding leaves us with questions about, not answers to, the kind of American economy we want now. In this series I've tried to raise some of those questions. This post is my last in the series. Writing it, and reading commentary on it here and around the blogs, has been a great pleasure. Thanks to Lynn Parramore (and to Bryce Covert, New Deal 2.0, and the Roosevelt Institute)! I hope these posts help frame an ongoing conversation about the strangely little-known, yet perennially resonant drama of American founding finance.

    William Hogeland is the author of the narrative histories Declaration and The Whiskey Rebellion and a collection of essays, Inventing American History. He has spoken on unexpected connections between history and politics at the National Archives, the Kansas City Public Library, and various corporate and organization events. He blogs at http://www.williamhogeland.com.

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  • Washington's Whiskey Woes

    May 2, 2011William Hogeland

    raised-fist-150Despite claims to the contrary, the Whiskey Rebellion was no anti-government crusade -- it was a battle for progressive taxation and regulation.

    raised-fist-150Despite claims to the contrary, the Whiskey Rebellion was no anti-government crusade -- it was a battle for progressive taxation and regulation.

    The seething social, political, and economic struggles over public and private finance that marked our founding period came to a head in the late fall of 1794, when President George Washington, back in the saddle for the first time since the Revolution, personally led nearly 13,000 troops into western Pennsylvania to subject its populace to a military occupation. Treasury Secretary Alexander Hamilton served as Washington's major domo for the operation -- and he took over full command when Washington turned back to Philadelphia. Under Hamilton's command, troops rousted citizens from beds in the snow and ran them to holding pens. They detained on no charge hundreds of people against whom the executive branch knew it had no evidence, administering searches and seizures of property and subjecting detainees to harsh conditions and terrorizing interrogations. After spending indefinite periods in privation and fear, most of the detainees were released -- inevitably, as there hadn't been evidence for their detention. The whole operation was conducted in the absence of warrants, any resolution of Congress, or legal suspension of habeas corpus.

    Prosecutions were never the purpose of the arrests. Troops soon arrived at every home in the region and required every male over the age of eighteen to sign an oath of loyalty to the federal government. Not surprisingly, most complied. Such was the context in which the U.S. government established its sovereignty in what was then the restless, defiant, trans-Appalachian West.

    The real issues sparking the 1794 suppression of western Pennsylvania have been trivialized, at first by Hamilton himself, as "the Whiskey Rebellion." Just as Hamilton hoped, historians and biographers have contentedly gone on marginalizing the democratic-finance movement that Hamilton dedicated his career to obstructing and tried to give the coup de grace in the suppression of western Pennsylvania.

    But the resistance wasn't about whiskey, and Hamilton knew it. It was about public finance and national economics.

    The resistance did begin in objections to the first federal tax on a domestic product, an excise on distilled spirits. That tax had been authored by Hamilton himself as linchpin to his comprehensive funding-and-assumption plan for supporting investment in the federal domestic debt and making that debt a national engine. But whereas Hamilton's famous political enemies in government -- the opposition party coming to be associated with Jefferson and Madison -- objected on general principles to Hamilton's activist approach to federal government, the ordinary people on whom his tax operated most painfully were objecting on other, more pragmatic grounds.

    They'd hoped for a government that would protect them against what they saw as the avaricious merchant-class lending industry, and they saw the whiskey tax as a betrayal of those hopes, a continuation, even an amplification, of finance policies deliberately favoring elites and obstructing ordinary people's efforts to get their hands on political and economic power. The rebels began by making disguised attacks on tax collectors -- in the classic "regulation" style that the unenfranchised had long employed to promote more democratic public finance. Then they began raising what had been known in 1776 as "liberty poles" (the Washington administration now deemed raising the poles seditious). By 1794, when the western counties of Pennsylvania, along with some in western Virginia, in correspondence with sympathizers in Kentucky, were marching under a new flag and threatening secession from the United States, their goals went well beyond regulation.

    They sought to form a new, western country, with direct access to trade on the Mississippi, cultivating a new kind of democratic republic in which ordinary people would thrive. The rebels were well armed and well organized, some of the toughest people America has ever known. Hunters, trackers, dirt-farmers, laborers, craftsmen and marksmen, they were rank-and-file veterans of the worst theaters of the Revolutionary war; their fathers and grandfathers had been harassing eastern government, both British and American, for many years. The prospect of their seceding and forming a government of their own, hostile to the U.S., was a terrifying one.

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    And of course it wasn't realistic. In the end the rebels' ruthless illegality was overcome by Hamilton, using his own ruthless illegality, on behalf of President Washington, in the occupation of western Pennsylvania.

    I've written in detail elsewhere, as have others, about how Hamilton's tax, which he sold to a financially naive Congress as an innocuous duty on consumption of a luxury item, was in fact carefully calibrated to cartelize the distilling business, favoring big merchants, eastern financiers, and federally-connected western cronies and putting small farmers out of business, all while using the tax revenues to pay interest (untaxed) to well-heeled investors in U.S. debt. Also widely discussed in Whiskey Rebellion literature (though not by Hamilton's biographers!) are Hamilton's eager anticipation of leading a military effort against U.S. citizens somewhere in America to enforce finance policy, and his manipulating, along with Attorney General William Bradford, the prosecution of tax resisters to create a pretext for bringing that plan to fruition in western Pennsylvania.

    But in the context of today's debates over taxation and public debt, it might be more important to look at some specific things the so-called whiskey rebels objected to in Hamilton's polices. Hamilton biographers haven't done so, and taking at face value Hamilton's own tactical dismissals of his populist critics' objections, they have confused many of the most important issues in founding finance.

    Although the rebels protested and ultimately mobilized militarily against a tax, they were neither inheritors of the Boston Tea Party nor forerunners of today's Tea Party movement. Unlike the Boston Sons of Liberty -- upper-middle-class men who objected to Parliament's taxing American's without representation, as well as to a bailout of a company deemed to big to fail -- the whiskey rebels wanted government not merely to observe the classic liberties of propertied Englishmen but to promote the equality of the less- and un-propertied. And unlike many in today's Tea Party, the rebels of the 1790's did not object to federal taxes per se. Their slogan wasn't "no taxation" or even "less taxation" but "equal taxation." They rightly identified the whiskey tax as what today we would call regressive. In their first of many unsuccessful petitions for repeal, they complained that the tax was unjust because it didn't operate in proportion to property. They saw clearly, in a way Hamilton's enemy Madison never would have, that the tax was designed to hit the poorest hardest, favor the east over the west, and end local efforts at popular finance.

    Nor did they object to an activist federal government. They just wanted it to be activist on behalf of labor, not wealth. Anti-federalists did try pandering to the economic populists epitomized by the whiskey rebels, but one of the most important rebel leaders was the preacher and activist Herman Husband, the first to be arrested by Washington's troops and sent to prison in Philadelphia. Husband's sermons were anything but antifederalist. Like Paine, another radical democrat with high regard for the progressive power of government, Husband called for a national government that would use its might to ensure equality. Unlike some of their fellow populists (then and now) both Paine and Husband saw power invested largely in "states' rights" as likely to be socially and economically regressive.

    The "madman of the Alleghenies," as Husband was called, envisioned a strong national government with social security; taxes on investment income; and slow, centrally managed inflation. Referring to the process by which democratic populists overturned the Pennsylvania government in 1776, he suggested that the rank-and-file militias might succeed in taking over western Pennsylvania. He was in his seventies when federal troops marched him over the Alleghenies and all the way to Philadelphia, where he lay in jail in awful conditions. Unlike many of those arrested, Husband was actually charged -- with sedition. But the jury found him not guilty.

    No matter. Detention was punishment enough -- and for Americans, the occupation of western Pennsylvania was example enough. Husband had been terribly weakened by his ordeal, and he died on his way back to western Pennsylvania. His grave is unknown. The obscurity in history of one our most original and prescient thinkers on finance, government, and democracy is emblematic of the obscurity of the real causes of the Whiskey Rebellion, the cogent thinking of the men who became rebels, and the open conflict between Hamiltonian finance and American democracy.

    William Hogeland is the author of the narrative histories Declaration and The Whiskey Rebellion and a collection of essays, Inventing American History. He has spoken on unexpected connections between history and politics at the National Archives, the Kansas City Public Library, and various corporate and organization events. He blogs at http://www.williamhogeland.com.

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  • Hamilton Speaks Out on the Debt Ceiling! (Or Not)

    Apr 25, 2011William Hogeland

    alexander_hamiltonThe father of the founding debt may have been most concerned with his wealthy friends, but his ideas spawned the liberal view of government.

    alexander_hamiltonThe father of the founding debt may have been most concerned with his wealthy friends, but his ideas spawned the liberal view of government.

    At FrumForum, Kenneth Silber has posted a funny interview with Alexander Hamilton, deploying actual Hamilton quotations in order to suggest how our first Treasury Secretary, the founding architect of U.S. finance policy, might advise us in the current debate on national debt. Hamilton's world was so different from ours that in the post, Hamilton comes off a bit like a wind-up toy:

    FrumForum: the 1790s, as the nation's first treasury secretary, you consolidated state debts into a national debt and ensured the U.S. would pay its Revolution-era commitments. What do you think of S&P's negative outlook on treasuries now?

    Hamilton: When the credit of a country is in any degree questionable, it never fails to give an extravagant premium, in one shape or another, upon all the loans it has occasion to make. Nor does the evil end here; the same disadvantage must be sustained upon whatever is to be bought on terms of future payment.

    And:

    FF: ... you created revenue cutters, what later became the Coast Guard, to collect fees from ships. What were your instructions to the officers?

    Hamilton: They will always keep in mind that their countrymen are freemen, and, as such, are impatient of everything that bears the least mark of a domineering spirit. They will, therefore, refrain, with the most guarded circumspection, from whatever has the semblance of haughtiness, rudeness, or insult.

    Still, the conceit is clever, because Hamilton's founding national finance ideas are embraced both by certain kinds of modern conservatives (the writers Richard Brookhiser and David Brooks, among many others) and by certain kinds of modern liberals (former Obama budget director Peter Orszag, the Brookings Institution, etc.). But Hamilton is also criticized across the political spectrum (by left-influenced historian Woody Holton, by sometime right-wing Republican strategist Kevin Phillips, etc.). Amid our current finance debates, especially regarding the purpose and legitimacy of public debt -- and most immediately on the height of the federal debt ceiling -- Hamiltonian finance raises questions that can spark controversy in all political quarters about debt, banking, taxes, and founding American values. Hamilton was conservative in the sense that he dedicated his policies to keeping his moneyed friends -- the traditional elites -- wealthy. Yet he founded institutions that led to modern liberal ideas about the role of government.

    People bring heat to Hamilton. "The bastard brat of a Scotch peddler," John Adams' characteristically mean-spirited slam, is matched today by those who call Hamilton everything from a Tory to a fascist and condemn his national finance plan of the 1790's as the hijacking of an economically democratic revolution supposedly intended by the patriots of 1776. Defenders, meanwhile, invoke the national financial straits that Hamilton faced, marginalize the popular finance movement he intended his measures to demolish, and pooh-pooh any casting of Hamiltonian finance as a socially regressive effort to establish an American money elite.

    Anachronistic slurs like "fascist" cloud the important issues; the period American slur "Tory" does too. And despite the overlooked importance to the founding of American popular finance, and the financial elitism the framers meant to build into the Constitution, it's possible to see the Constitution that empowered Hamiltonian finance as more aligned with the Declaration than opposed to it. Yet Hamilton's motives and goals for the country, controversial in their time, remain controversial today, and for good reason.

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    Hamilton is famous for putting the country on what historians like to call sound financial footing and building confidence in what they call the credit of the United States. What those terms meant for 18th-century America was better understood by Hamilton himself than it is by many today, including some historians. To Hamilton, sound national finance meant concentrating national wealth in a small number of government-connected hands, thus enabling the financing of ambitious national projects. And good U.S. credit meant ensuring that holders of federal bonds -- those government-connected high-finance men, the public creditors he hoped would invest in building the nation -- could count on staying rich and getting richer by collecting their government interest payments.

    To that end, rather than pay off the federal domestic debt (as he is reflexively credited with wanting to do), Hamilton was perfectly articulate about wanting to grow and finance that debt, making it an engine of national purpose. In that process, he showed the influence of his mentor, the Revolutionary War financier Robert Morris, who had recommended Hamilton to Washington for the Treasury job. Working with Morris in the 1780s, the young Hamilton had bent every effort to swelling the debt and making it federal.

    Then, with ratification of the Constitution, the student succeeded where the master had failed. Persuading Congress to assume the states' debts in the federal one, and then to fund it all, Hamilton achieved Morris' longstanding goal of placing all public debt, much held by nationalist financiers themselves, in the hands of the national government. If there had been a debt ceiling, Hamilton would have had Congress raise it. Both new taxes and a central bank formed natural parts of that plan.

    It's hardly surprising, then, that Hamilton's high regard for both national debt and government power in banking can run him afoul of some on the right, who see him as the founder of a big, sprawling, debt-ridden federal government meddling tyrannically in financial markets. The FrumForum "interview" puts it this way:

    FrumForum: But if you're such a liberty-minded guy, how could you have created a central bank, a predecessor to the Fed, when many conservatives and libertarians these days want to end the Fed?

    Hamilton "responds" with some tepidly reasonable sounding truisms about how all successful nations utilize central banking. Those observations wouldn't cut it with the conservative libertarians FrumForum invokes; they didn't cut it with James Madison, many libertarians' hero, who objected to the bank on constitutional grounds. Hamilton made the winning argument (also cited in Silber's post) that Congress enjoys both enumerated and unenumerated powers. If Congress determines that exercising the constitutionally enumerated power to do what is "necessary and proper" in the discharge of its duties means exercising an unenumerated one and forming a bank, it can form a bank.

    Hamilton thus laid out an idea about the role of the federal government that would appeal to liberals today. It's a long, strange trip from Hamilton's bank to the National Guard in Little Rock; that trip includes a Civil War, a bunch of amendments, and a civil rights movement, which Hamilton of course had nothing to do with. Yet with his argument about the bank, Hamilton sowed seeds for an activist vision of federal power, with national government an instrument for national good, now generally associated with political liberalism.

    So Hamilton was a kind of modern liberal. But he wasn't the current kind of modern liberal. His commitment to immense energy in the executive branch and a firm government hand in the national economy did set a founding precedent for FDR and the New Deal. But he wanted to use federal power not to improve economic equality but to distribute wealth upward and keep it there. Hamilton supporters, dismissing all criticism as caviling, perpetually celebrate their man for his brilliance and boldness in creating national stability in a difficult time. Anti-Hamiltonians may think there were better ways the young nation could and should have gone.

    What if blending government activism with elite finance, and pushing back the advances of the democratic finance movement, did serve purposes critical in establishing our nationhood? All the more reason to delve into the social, political, and cultural conflicts those policies embodied and the difficult legacies they have left us.

    William Hogeland is the author of the narrative histories Declaration and The Whiskey Rebellion and a collection of essays, Inventing American History. He has spoken on unexpected connections between history and politics at the National Archives, the Kansas City Public Library, and various corporate and organization events. He blogs at http://www.williamhogeland.com.

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