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In defending his plan, Hamilton did not speak just in arid technical terms. He talked of justice, equity, patriotism, and national honor. His funding system was premised upon a simple concept: that the debt had been generated by the Revolution, that all Americans had benefited equally from that revolution, and that they should assume collective responsibility for its debt. If state debts were unequal, so were the sacrifices made during the ..
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Ron Chernow |
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Some states, he noted, had paid their debts by ignoble means. New York, for instance, had reneged on interest payments to drive down the market value of its debt, making it cheaper for the state to buy it back. Hamilton also made a subtle, sophisticated argument that without assumption, indebted states would have to raise their taxes, while healthy states would lighten their tax loads. This would trigger a dangerous exodus of people from hi..
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Ron Chernow |
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April 12, 1790, the House voted down Hamilton's assumption plan, thirty-one to twenty-nine, and two weeks later voted to discontinue all debate on the issue. By early June, it looked as if the assumption plan was heading for oblivion. So Hamilton began to search for a compromise that would salvage the linchpin of his economic program.
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Ron Chernow |
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promote--the federal assumption of state debt and the selection of New York as the capital--assumption was incomparably more important to him. It was the most effective and irrevocable way to yoke the states together into a permanent union. So when he saw that Madison possessed the votes to block assumption, Hamilton considered bargaining away New York as the capital in exchange for southern support for assumption.
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Ron Chernow |
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On January 28, 1791,
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Ron Chernow |
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He endorsed the dollar as the basic currency, divided into smaller coins on a decimal basis. Because many Americans still bartered, Hamilton wanted to encourage the use of coins. As part of his campaign to foster a market economy, Hamilton suggested introducing a wide variety of coins, including gold and silver dollars, a ten-cent silver piece, and copper coins of a cent or half cent.
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Ron Chernow |
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Americans today know little about the terrorism that engulfed the South during Grant's presidency. It has been suppressed by a strange national amnesia. The Klan's ruthless reign is a dark, buried chapter in American history. The Civil War is far better known than its brutal aftermath. Without knowing that history, it is easy to find fault with Grant's tough, courageous actions.
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Ron Chernow |
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c026164
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It was already an age of scientific wonders that promised to reshape economies and boost productivity. From the first steam engine that James Watt built in Great Britain in the 1760s to the hot-air balloons that floated across French skies in the 1780s to Eli Whitney's invention of the cotton gin and the use of interchangeable parts in the 1790s, it was a time of technological marvels. No industry was being transformed more dramatically tha..
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Ron Chernow |
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Far more than just a technical document, the Report on Manufactures was a prescient statement of American nationalism.
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Ron Chernow |
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Hamilton's list of the advantages of manufacturing has a quintessentially American ring: "Additional employment to classes of the community not ordinarily engaged in the business. The promoting of emigration from foreign countries. The furnishing greater scope for the diversity of talents and dispositions which discriminate men from each other. The affording a more ample and various field for enterprise."48 Manufacturers and laborers would ..
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Ron Chernow |
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2a72042
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For Hamilton, the federal government had a right to stimulate business and also, when necessary, to restrain it. As Arthur Schlesinger, Jr., has observed, "Hamilton's enthusiasm over the dynamics of individual acquisition was always tempered by a belief in government regulation and control."54 In arguing, for instance, that government inspection of manufactured articles could reassure consumers and galvanize sales, he anticipated regulatory..
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Ron Chernow |
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Endorsing still another form of government activism, Hamilton claimed that nothing had assisted Britain's industry more than its network of public roads and canals. He therefore touted internal improvements--what we would today call public infrastructure--to meld America's scattered regional markets into a single unified economy.
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Ron Chernow |
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The residence law that passed Congress in July 1790, establishing Philadelphia as the interim capital,
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Ron Chernow |
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Determined not to be caught shorthanded in case of war, Hamilton supported "an annual purchase of military weapons" to aid "the formation of arsenals."57 So vital were supplies to national security that Hamilton did not rule out government-owned arms factories."
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Ron Chernow |
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f877e93
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As always, Hamilton cited constitutional grounds for his program, invoking the clause that gave Congress authority to "provide for the common defence and general welfare."59 Owing in part to Hamilton's generous construction of this clause, it was to acquire enormous significance, allowing the government to enact programs to advance social welfare."
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Ron Chernow |
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e34299c
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John D. Rockefeller was the Protestant work ethic in its purest form, leading a life so consistent with Weber's classic essay that it reads like his spiritual biography.
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Ron Chernow |
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December 14, 1790, one day after he jolted Congress with his call for an excise tax on liquor, Alexander Hamilton submitted another trailblazing report, this one a clarion call to charter America's first central bank.
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Ron Chernow |
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dc79506
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But who would direct this mysterious bastion of money? Its ten million dollars in capital would be several times larger than the combined capital of all existing banks, eclipsing anything ever seen in America. Hamilton, wanting the bank to remain predominantly in private hands, advanced a theory that became a truism of central banking--that monetary policy was so liable to abuse that it needed some insulation from interfering politicians: "..
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Ron Chernow |
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To safeguard the public interest, the government would become a minority stockholder in the bank and able to vote for directors. Of the
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Ron Chernow |
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To embarrass Madison, Elias Boudinot read aloud in Congress some passages about the "necessary and proper" clause from Federalist number 44, notably the following: "No axiom is more clearly established in law or in reason than wherever the end is required, the means are authorized; wherever a general power to do a thing is given, every particular power for doing it is included."26 Hamilton probably tipped off his old friend that Madison had..
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Ron Chernow |
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Hamilton lent his opinion the erudition of a treatise and the warmth of a manifesto. The essence of it was that government must possess the means to attain ends for which it was established or the bonds of society would dissolve. To liberate the government from a restrictive reading of the Constitution, Hamilton refined the doctrine of "implied powers"--that is, that the government had the right to employ all means necessary to carry out po..
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Ron Chernow |
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Washington was taciturn, once advising his adopted grandson, "It is best to be silent, for there is nothing more certain than that it is at all times more easy to make enemies than friends." --
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Ron Chernow |
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Meanwhile, the secretive Senate met upstairs in a chamber without a spectator section. For the first five years, senators conducted their business behind closed doors.
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Ron Chernow |
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during the summer and early fall. In the House, James Madison helped to compress dozens of changes to the Constitution recommended by the state conventions into twelve amendments; the first ten, when ratified by the states, would be known as the Bill of Rights.
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Ron Chernow |
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And in the Senate, Oliver Ellsworth took the lead in drafting a judiciary act that provided for a six-member Supreme Court, buttressed by federal district and circuit courts.
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Ron Chernow |
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On May 19, Representative Elias Boudinot of New Jersey, Hamilton's old patron from Elizabethtown, proposed that Congress establish a department of finance.
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Ron Chernow |
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starters, it would be more efficient, since there would be one overarching scheme for settling debt instead of many small, competing schemes.
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Ron Chernow |
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It also reflected a profound political logic. Hamilton knew that bondholders would feel a stake in preserving any government that owed them money. If the federal government, not the states, was owed the money, creditors would shift their main allegiance to the central government.
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Ron Chernow |
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to be an essential ingredient in its structure that it shall be under a private not a public direction, under the guidance of individual interest, not of public policy."18"
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Ron Chernow |
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To make good on payments, Hamilton knew he would have to raise a substantial loan abroad and boost domestic taxes beyond the import duties now at his disposal. He proposed taxes on wines and spirits distilled within the United States as well as on tea and coffee. Of these first "sin taxes," the secretary observed that the products taxed are "all of them in reality luxuries, the greatest part of them foreign luxuries; some of them, in the ex..
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Ron Chernow |
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A sinking fund is a repository, set up apart from the general budget, for revenues to pay off debt.) It would sequester revenues from the sudden whims of grasping politicians who might want to raid the Treasury for short-term gain. The sinking fund would retire about 5 percent of the debt each year until it was paid off.
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Ron Chernow |
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065ae96
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Because the Constitution made no mention of a cabinet, Washington had to invent it. At first, this executive council consisted of just three men: Hamilton as secretary of the treasury, Jefferson as secretary of state, and Henry Knox as secretary of war. The first attorney general, thirty-six-year-old Edmund Randolph of Virginia, had no department and received an annual retainer of $1,500 for an essentially consultative role. Viewed as the g..
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Ron Chernow |
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Perhaps the main reason that Washington and Hamilton functioned so well together was that both men longed to see the thirteen states welded into a single, respected American nation. At the close of the war, Washington had circulated a letter to the thirteen governors, outlining four things America would need to attain greatness: consolidation of the states under a strong federal government, timely payment of its debts, creation of an army a..
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Ron Chernow |
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Such outings were rare during Hamilton's harried first days in office. He had to create a customs service on the spot,
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Ron Chernow |
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7b638a2
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During his second day in office, he issued a circular to all customs collectors, demanding exact figures of the duties accumulated in each state. When they sent back suspiciously low numbers, Hamilton, who knew something about smuggling from St. Croix, suspected that it must be rife along the eastern seaboard, leading him to the next logical step. "I have under consideration the business of establishing guard boats," he told one corresponde..
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Ron Chernow |
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In a significant decision, he decided that customs revenues could be paid not just in gold and silver but with notes from the Bank of New York and the Bank of North America, an innovation that began to steer the country away from use of coins and toward an efficient system of paper money.
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Ron Chernow |
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Even later, as a private citizen, he said that his own "scrupulousness" had prevented him from "being concerned in what is termed speculation."9 This made his blindness to Duer's shameless machinations the more bewildering. Hamilton was an extremely perceptive judge of character, and William Duer was one of the few cases in which his acute vision seems to have been blinkered."
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Ron Chernow |
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Far from being a pro-British lackey, much less a high-level spy, Hamilton stubbornly defended U.S. interests at every turn. He was bargaining with Beckwith, not groveling. He insisted that the United States should be able to trade with the British West Indies.
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Ron Chernow |
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wanted England to heed the peace treaty and relinquish its western forts in the Ohio River valley. The one place where Hamilton deviated from official policy was in applauding Britain's refusal to hand over slaves who had defected during the Revolution. "To have given up these men to their masters, after the assurances of protection held out to them, was impossible," Hamilton told Beckwith."
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Ron Chernow |
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What mattered was that people trusted the government to make good on repayment: "In nothing are appearances of greater moment than in whatever regards credit. Opinion is the soul of it and this is affected by appearances as well as realities."
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Ron Chernow |
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Hamilton stole the moral high ground from opponents and established the legal and moral basis for securities trading in America: the notion that securities are freely transferable and that buyers assume all rights to profit or loss in transactions.
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Ron Chernow |
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The government would have to track them down, ascertain their sale prices, then trace all intermediate investors who had held the debt before it was bought by the current owners--an administrative nightmare. Hamilton could have left it at that, ducking the political issue and taking refuge in technical jargon. Instead, he shifted the terms of the debate. He said that the first holders were not simply noble victims, nor were the current buye..
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Ron Chernow |
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Reproaching his slave carpenters, he said, "There is not to be found so idle a set of rascals."28 Of a slave named Betty who worked as a spinner in the mansion, he complained that "a more lazy, deceitful and impudent hussy is not to be found in the United States."29 He" --
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Ron Chernow |
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How to remedy this want of confidence? Hamilton submitted a twelve-point program, a fully realized vision of a financial system that reflected sustained thinking. Congress should create a central bank, owned half by the government and half by private individuals, that could issue money and make public and private loans. Drawing on European precedents, Hamilton cited the Bank of England and the French Council of Commerce as possible models. ..
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Ron Chernow |