Hamilton’s Curse

How Jefferson’s Archenemy Betrayed the American Revolution—and What It Means for Americans Today

Thomas J. DiLorenzo

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Below I have made available various excerpts from DiLorenzo’s most recent book, Hamilton’s Curse.  In this book, DiLorenzo correctly argues that the policies of Alexander Hamilton were designed to undermine individual Liberty so as to favour the expansion of a Leviathan state, the very sort of state Americans had a few decades earlier lead a revolution to escape.

In reading this text, I invariably found myself writing comments in response to various points DiLorenzo made.  Included below are not only excerpts from Mr. DiLorenzo’s book, found in white, but likewise my own personal comments, found in pale yellow.

Also be sure to check out my live-blogging of the book.


Introduction: The Real Hamilton

Is Best Which Governs Least (p. 3)

Although Jefferson certainly believed this, there exists no evidence I know of that he actually stated it in words.

Betraying the Revolution (p. 4)

The American Revolution was fought against a highly centralized state that was headed by a despotic chief executive who pulled the strings of the British mercantilist economic system (that is, a system built on protectionism, government franchise monopolies, a state-run bank, and interventionism that benefited the state and its supporters at the expense of the general public) as an instrument of plunder at the expense of the colonists.  But Hamilton devoted the last quarter-century of his life to enshrining this very system in America.  Thus Hamiltonianism—governmental consolidation, the elimination of true federalism, dominant executive power, and mercantilist economic policies—amounted to nothing less than a betrayal of the principles for which Americans fought in the Revolution.

Hamilton Was Anything But Capitalist (p. 5)

[Ron] Chernow mislabeled Hamilton as “the prophet of the capitalist revolution in America,” when in fact this founder’s hyperinterventionist approach to the economy was anything but capitalism.  In reviewing Chernow’s book and in at least one other column, [neoconservative commentator David] Brooks, who proudly calls himself a “Hamiltonian,” claimed that Hamilton somehow single-handedly “created capitalism.”  The biographer Forrest McDonald made a similarly absurd assertion in giving Hamilton virtually all the credit for America’s becoming “the richest, most powerful and freest nation in the history of the world.”

Liberalism or “Liberalism”? (p. 6)

The author should put “liberal” in quotes so as to distinguish it from the real liberalism of Jefferson, Thoreau, and Mises.

Hamilton, Neoconservatives, and National Greatness (p. 6)

[David] Brooks and his fellow neoconservative William Kristol, editor of The Weekly Standard magazine, began their crusade for “national greatness conservatism” with a 1997 Wall Street Journal article that urged conservatives to reinvigorate “the nationalism of Alexander Hamilton and Henry Clay and Teddy Roosevelt.”  Using the powers of the federal government to achieve some kind of “national greatness,” as they favour, is vintage Hamiltonianism and could not possibly be farther from the Jeffersonian tradition, which held that government in a free society has no business engaging in such foibles.

Traditional Conservatism was Objectively Statist (p. 6)

Why does the author imply that “traditional conservatism” was ever opposed to big government?  Hamilton is a traditional conservative.

Traditional conservatism was aimed at defending and restoring the ancien régime.  What better or more succinct way to describe Hamilton’s objective?

Reagan Said Government Was the Problem, But… (p. 7)

Reagan opposed big government rhetorically, but his policies were very big government.  Just because he said government was the problem doesn’t mean he believed it, or acted as though he believed it.  People who oppose Hamiltonianism are classical liberals or libertarians.

Chapter 1: The Rousseau of the Right

The New York Post (p. 10)

In his private career [Hamilton] became a…founder of the New York Post newspaper (founded for the purpose of smearing Jefferson).

Hamilton Owned Slaves (pp. 10–11)

Hamilton was not a plantation owner like Jefferson, but an aristocratic New Yorker.  Like Jefferson—and many other New York aristocrats—he was a slave owner who nevertheless at times spoke eloquently in opposition to the institution of slavery.

Hamilton’s wife, Eliza, was from a prominent and wealthy New York slave-owning family (the Schuylers) and retained some of the “house slaves” after marrying Hamilton.  This fact is usually soft-pedaled by Hamilton’s more worshipful biographers.  “Hamilton…may have had a slave or two around the house” and “was too much a man of his age…to push for emancipation,” wrote the Cornell University historian and Hamilton biographer Clinton Rossiter, a onetime editor of The Federalist Papers.  (Jefferson, on the other hand, endorsed a plan to end the slave trade early in the Revolution; condemned King George III for introducing slavery into America, in the first draft of the Declaration of Independence; laid out a plan for the abolition of slavery in Virginia, in Notes on the State of Virginia; and proposed blocking the spread of slavery in the Northwest Territory in 1784.)

Chernow oddly labels Hamilton an “abolitionist,” despite the fact that he owned slaves and never endorsed abolition per se.  He also bends over backward to downplay Hamilton’s slave ownership, at one point arguing that, yes, he purchased six slaves at a slave auction, but they were “probably” for his brother-in-law—as though that makes the purchase of human beings less immoral.

Liberty or Empire (p. 12)

Both men [Jefferson and Hamilton] fully understood what was at stake:  Would the American government mimic the British and pursue “national greatness,” “imperial glory,” and empire, as Hamilton preferred?  Or would the primary purpose of government be the modest Jeffersonian one of protecting the lives, liberties, and property of its citizens?  Both men understood that empire would mean that government would become the master, rather than the servant, of the people, as it had been for generations in the Old World.

The founding generation certainly understood that the colonists of an empire could and would be treated as tax slaves or cannon fodder.  This was the history of the Old World, and they had fought a revolution to escape such a fate.  But the “nationalists,” led by men like Hamilton and centered in New York and New England, also understood that life could be quite grand for those who managed and ruled over an empire.  That’s why his party—the Federalists—fought so hard and long for a much more powerful, consolidated, monopolistic government and for mercantilist economic policies.

Hamilton the Nationalist (p. 13)

[Clyde] Wilson has also made an important distinction between a “nationalist” and a patriot:  “Patriotism is the wholesome, constructive love of one’s land and people.  Nationalism is the unhealthy love of one’s government, accompanied by the aggressive desire to put down others—which becomes in deracinated modern men substitute for religious faith.  Patriotism is an appropriate, indeed necessary, sentiment for people who wish to preserve their freedom; nationalism is not.”  Alexander Hamilton is generally acknowledged as being the most famous nationalist in American history.

Hamilton Wants Empire (p. 14)

As Clinton Rossiter explained, “Hamilton’s overriding purpose was to build the foundations of a new empire.”  He dreamed of governmental “glory” that “could reach out forcefully and benevolently to every person,” said Rossiter.  (Never mind that force and benevolence are more often than not opposites.)

The Articles Were Fine (pp. 14–15)

To Hamilton’s and other Federalists’ claims that the government needed to be more powerful and consolidated, Patrick Henry sagely responded that the government under the Articles of Confederation was powerful enough to have created and supplied an army that defeated the British Empire.

Hamilton Wanted a Monarchy (pp. 16–17)

At the convention Hamilton proposed a permanent president and senate, with all political power in the national government, as far away as possible from the people, and centered in the executive.  He also wanted “all laws of the particular states, contrary to the constitution or laws of the United States [government], to be utterly void,” and he proposed that “the governor…of each state shall be appointed by the general government, and shall have a negative [i.e, a veto] upon the laws about to be passed in the state of which he is a governor.”

In plainer language, Hamilton proposed a kind of “king” who would yield supreme power over all people, who in turn would have essentially no say in how their government was run.  The states would be mere provinces whose governors would be appointed by and loyal to the “king.”  Under such a regime, all political power in the nation would be exercised by the chief executive and his circle of advisors, which would undoubtedly have included Alexander Hamilton as perhaps the chief advisor.

But the convention did not embrace Hamilton’s plan for executive dictatorship and monopoly government.  …[John] Taylor noted that the convention attendees viewed the Constitution as a compact among the free and independent states and not as the creation of a “national” government.

Paradoxical Federalist Arguments (p. 19)

[Senator John] Taylor noted that the proponents of consolidation relied on “paradoxical” arguments.  They contended, he said, “that the greater the [government] revenue, the richer are the people; that frugality in the government is an evil; in the people, a good;…that monopolies and exclusive privileges are the general welfare; that a division of sovereignty will raise up a class of wicked, intriguing, self-interested politicians in the states; and that human nature will be cleansed of these propensities by a sovereignty consolidated in one government.”

Hamilton Lies (p. 20)

[H]istorian Richard B. Morris wrote that Hamilton “constantly sought to reassure the states’ rights politicians [the Jeffersonians] that state sovereignty would never be jeopardized” by the new Constitution; yet he hoped to abolish state sovereignty once the Constitution was adopted.  He also promised, during the constitutional debates at the New York ratifying convention, that the U. S. Congress would never contemplate “marching the troops of one state into the bosom of another” for any reason.  But as we will see, when he became treasury secretary he personally accompanied President George Washington and some thirteen thousand (mostly conscripted) troops into Pennsylvania to attempt to quell the so-called Whiskey Rebellion.

Power Corrupts (pp. 20–21)

Big Government is For Special Interests (pp. 23–24)

To claim that government policies that benefit small but powerful special interests at the expense of the rest of society are really “in the public interest” is an ancient political tactic.  …  But no government policy can be said to be in “the public interest” unless it benefits every member of the public.  And this is a rare if not nonexistent occurrence in any democracy.

Hamilton was an American mercantilist, and he and his party (and its political heirs, the Whigs and Republicans) advocated special-interest policies that would primarily benefit politically connected merchants, manufacturers, speculators, and bankers at the expense of the rest of the public.  The “public interest” rhetoric was (and is) an indispensable political smoke screen if they were to achieve political success.  The wool must be pulled over the public’s eyes with “public interest” rhetoric if mercantilism were to succeed.  Jefferson and his political compatriots, such as John Taylor, saw through it.

Judicial Activism or Judicial Restraint? (p. 27)

Why do people still insist on implying that judicial activism inherently expands the state?  It seems to me that it is judicial restraint that allows the Congress and the president to expand state power—in other words, the judiciary restrains itself from overriding the unconstitutional actions of the other two branches.

Liberal judicial activism was used back in the day to limit the power of the state, to say that the unconstitutional big government policies of the other two branches were just that—unconstitutional—and were thus null and void.  Liberal judicial activism was used in the early years of Roosevelt to fight his unconstitutional New Deal.

Judicial restraint, conversely, was used—more often then not—to pretend that various big government programmes of Congress and the president were in fact perfectly fine vis-à-vis the Constitution.  Thus, the judicially restrained court effectively restrained itself from nullifying these laws.

It thus seems to me that the Federalist Party brought us the birth of conservative judicial restraint.

Washington Rejected “Living Constitutionalism” (p. 28)

Hamilton’s Implied and Resulting Powers (pp. 28–29)

Not only were there supposedly “implied” powers in the Constitution that only the wise and lawyerly like Hamilton recognized (but that were foreign to James Madison, who like Jefferson was a strict constructionist), there were also “resulting powers,” Hamilton argued.

Thus, if the government engaged in an unconstitutional war of conquest and succeeded, the unconstitutional “powers” would magically become constitutional, in Hamilton’s opinion.  Taken to its logical ends, this argument implies that any action of government would be de facto “constitutional” by virtue of the fact that the action occurred.  This is how Hamilton viewed the Constitution—as a potential blank check for unlimited powers of government.

Hamilton the Militarist (p. 32)

It was also Hamilton who invented the theory of “war powers.”  The Constitution does give the central government the power to “provide for the commmon Defence,” but Hamilton interpreted that to mean that unlimited resources should be given to the military, including conscription and a standing army in peacetime.  (The Constitution itself specifically limited the existence of a standing army to two years.)  In Federalist no. 23 Hamilton wrote that the resources of the military “ought to exist without limitation.”  He also wanted government to nationalize all industries related to the military, which in today’s world would mean virtually all industries.

The Whiskey Rebellion (pp. 33–36)

Chapter 2: Public Blessing or National Curse?

Government Debt Dupes Taxpayers (pp. 38–39)

No Itemized Federal Tax Bills (p. 38)

American taxpayers have never been presented with itemized federal tax bills.

War is Exorbitant (p. 39)

Taxpayers can occasionally be tricked into supporting even the biggest government program of all—war—if the direct costs to them can be hidden well enough through borrowing.  There would not be as many wars, and the ones that do occur would likely be shorter, if they were paid for through direct taxation.  Taxpayers feeling the sting of gigantic wartime tax increases would be much more inclined to pressure their governmental representatives to limit their military adventures to national defense purposes, as opposed to imperialistic ventures based on more dubious motives.  Americans may agree with the goal of “spreading democracy around the globe” as long as they believe that it won’t cost them much (or anything).  Present them with an explicit tax bill for it, however, and many of them will reverse their opinions.

Government Debt Has Drenched the Earth in Blood (p. 40)

Hamilton Was Smart Enough to Know That Debt Would Become Excessive (pp. 40–41)

Tax Cuts Good; Hamilton Bad (p. 43)

Debt Fuels Empire and Eventual Bankruptcy (p. 43)

Government Borrowing (p. 45)

[G]overnment borrowing reduces the productive capital of the private sector—the sole source of wealth creation—and diverts it to government spending programs.

The Court Party (p. 46)

This is how the Federalists became known as the “court party,” the party of governmental graft, spoils, and patronage.

Free and Independent States (p. 46)

During the American Revolution (and long thereafter) the colonies or states considered themselves to be free and independent.  This is the exact language that was used in the Declaration of Independence.  They considered themselves to be independent countries, just as Britain and France were independent countries.  In the eighteenth century the word congress meant an assembly of sovereign countries.  They individually taxed their citizens and borrowed as well to finance the war.  When the war ended, King George III of England signed a peace treaty with each individual state, named one by one in the document, and not with some consolidated entity called “the United States government.”

The Sedition Act (pp. 49–50)

The Party of Hamilton also used its power to make it illegal to criticize the government—the Federalist-controlled government, that is.  With the Federalist John Adams as president, Congress passed the notorious Sedition Act, which was written so that it would expire the day Adams left office.  Journalists, ordinary citizens, and even a member of Congress—Matthew Lyon of Vermont—were imprisoned for merely criticizing the government.  A Revolutionary War veteran named Anthony Haswell, who was the editor of the Vermont Gazette newspaper, was imprisoned for placing ads in Vermont newspapers requesting donations to help pay for Congressman Lyon’s fines.  The Reverend John C. Ogden carried a petition to Philadelphia for the release of Congressman Lyon and was himself imprisoned for doing so.  At least twenty-one newspaper editors, all of whom supported Jefferson, were imprisoned.  No Federalists were harassed by the Sedition Act.  “Everywhere men were being intimidated into silence” by what the historian Claude Bowers called the Federalists’ “reign of terror.”

Hamilton apparently did not lobby for the Sedition Act, but he did support it once it became law.  Jefferson and Madison were again his foremost opponents, as authors of the Virginia and Kentucky Resolves of 1798, which were declarations by those two states that they did not intend to allow the [Alien and] Sedition Act[s] to be enforced within their boundaries.

National Debt from Jefferson to Present (pp. 51–53)

Tax Serfs (p. 53)

Perpetual government debt…essentially relies on forced labor.  Citizens are forced to work to pay taxes to pay off the principal and interest on the national debt.  Not only are today’s citizens turned into tax serfs by a large national debt, but so are future generations, who are of course politically defenseless.

Politicians Are Free to Spend Foolishly (p. 54)

Politicians…have no personal obligation to pay anyone anything when they vote to spend more than the tax revenues that are available.

The Effects of Government Debt on Time Preference Stagnates Growth (pp. 54–55)

Keynes As a Neo-Hamiltonian (pp. 56–57)

Chapter 3: Hamilton’s Job Bank

A Nationalised Bank (pp. 58–59)

The third leg of Hamilton’s mercantilist stool…was a nationalized bank that would be managed by politicians in the nation’s capital (even if ostensibly privately owned).  …  As with the national debt, the main purpose of the bank was to centralize and enlarge the state.  …  [I]t would also provide infinite patronage opportunities for the politicians who controlled it, just as the Bank of England had done for generations.  Indeed, Hamilton’s entire economic plan—of debt, a government bank, corporate welfare, heavy taxation, and a centralized state—was nothing much more than his attempt to clone the British governmental system of centralized governmental power linked to mercantilism.

…  James Jackson of Georgia…was shocked at the boldness of Hamilton and his party in attempting to adopt the very kind of governmental system the Revolution was fought to discard.  Upon observing the corruption of Hamilton’s debt scheme, and hearing of his plan for a monopolistic, government-run bank, he asked, ”What was it [that] drove our forefathers to this country?  Was it not the ecclesiastical corps and perpetual monopolies of England and Scotland?  Shall we suffer the same evils in this country?”

Jefferson and the Necessary and Proper Clause (pp. 59–60)

P.J. O’Rourke Quote (p. 63)

The writer P.J. O’Rourke was only half-kidding when he once wrote that giving money and power to politicians is like giving whiskey and car keys to teenage boys.

Robert Remini Quote on the Bank of the United States (pp. 66–67)

The BUS had a powerful lever on state banks, which it achieved by acquiring their notes.  This acquisition took two principle forms: since the BUS managed…the federal tax revenues deposited with it and since these taxes were frequently offered in the form of state bank notes, the Bank could either accept and hold the notes or it could present them to the issuing banks and demand specie; further, since the BUS had tremendous resources of its own, it could go into the money market and buy state bank notes and then present them for redemption to the issuing banks.

Andrew Jackson Quote on the Hydra-headed Monster (p. 69)

Upon taking office in March 1829, President Jackson decried the BUS as a “monster, a hydra-headed monster…equipped with horns, hoofs, and tail so dangerous that it impaired the morals of our people, corrupted our statesmen, and threatened our liberty.  It bought up members of Congress by the Dozen…subverted the electoral process, and sought to destroy our republican institutions.”

Jackson, Not His Detractors, Was Liberal (pp. 69, 72)

It disturbs me that the author wishes to say that “[l]iberal historians…have long denigrated Jackson and the Jacksonians.”  Once again, the author is using the term “liberal” to describe statists.  But why, praytell, should the liberals surrender their label to their enemies?  Properly understood, Jackson was a liberal.  Sure, he had his flaws, and these flaws prevent me from going to far as to label the man a full-blown libertarian.  But “liberal” remains an appropriate label for Jackson.

All Classes of People Opposed the Central Bank (p. 70)

Whereas the Bank’s main supporters, the remnants of the old Hamiltonian political machine, came “particularly from the upper classes,” as Remini wrote, “men from all classes” and from “every section of the country” joined President Jackson in the fight against the BUS.

Politicians Love Inflation (pp. 73–74)

Government control of the money supply amounts to legalized counterfeiting.  The ability to print paper money is even more a politician’s dream than the ability to incur government debt, for no direct taxation is involved in the government’s efforts to secure resources from the public.  It all seems painless to the taxpayers—as long as they remain ignorant about the effects of inflation.

Politicians benefit from inflation by spending billions of dollars on various constituent groups and effectively buying votes (and campaign contributions).  These individuals and groups may benefit from inflation because of their political connections, but as prices rise, year in and year out, most of society loses.  This is especially true of anyone whose income is relatively fixed, such as people on salaries that may not keep up with inflation, retired people, and anyone holding cash assets.  To all of these people, inflation is a hidden tax.

Chapter 4: Hamilton’s Disciple: How John Marshall Subverted the Constitution

Chapter 5: The Founding Father of Crony Capitalism

Chapter 6: Hamiltonian Hegemony

Chapter 7: The Hamiltonian Revolution of 1913

Chapter 8: The Poisoned Fruits of “Hamilton’s Republic”

Conclusion: Ending the Curse