Hamilton's American Capitalism

By Douglas V. Gibbs

I watched a documentary two nights ago about the famous duel between Alexander Hamilton and Aaron Burr. The narrator explained the history between the two men, as well as going deep into their years as young men prior to the American Revolution. Both served in the war, and both had colorful lives.

The summary of Aaron Burr seemed historically accurate enough. When it came to Alexander Hamilton, however, the liberal slant on history was all too apparent.

Alexander Hamilton is a fascinating member of the class of Founding Fathers. He desired the federal government to be more centralized than many of the other founders intended. Hamilton even stated during the Constitutional Convention that the United States should be an empire with an American King leading the way. Outnumbered by statesmen that wished for the federal system to be limited in its scope and power, and serving alone as a delegate from New York (because his New York companions who were anti-federalists stormed out of the convention), Hamilton toned his rhetoric way back near the end of the convention, and in his federalist writings.

The documentary, after speaking favorably of Hamilton's centralized government policies, comparing Hamilton's vision for America to Jefferson's concept of a "weak national government," called Hamilton the father of capitalism.

I brought this up to a friend of mine who has a masters degree in History, and he replied, "They meant 'American Capitalism' which is characterized by heavy government regulation."

Based on Hamilton's writings outside the federalist papers, his arguments during the Constitutional Convention (as per Madison's notes on the Constitutional Convention), and his actions as the first secretary of the treasury, Hamilton's philosophies as a big government authoritarian are widely recognized.

As treasury secretary, Hamilton's policies were marked with protectionism, mercantilism, and heavy government regulation. Unlike Adam Smith, Hamilton did not believe the free market should be totally free. The populace, and most of his colleagues, as far as Hamilton was concerned, were too ignorant to be left with the responsibility of managing the nation's wealth. Only a political elite, in Hamilton's opinion, held the wisdom necessary to operate America's finances.

Hamilton's America did not emerge from the debates in Philadelphia in 1787 as he had hoped, but in Hamilton's opinion, it was a step in the right direction when he considered the "weaker" government that existed under the Articles of Confederation. A centralized government did not appear through the political scene, either. And despite Hamilton's invention of "implied powers," which was designed to usurp the Constitution through a strategy of "interpreting" the Constitution, and for the federal government to give to itself authorities not expressly granted by the States through the Constitution.

Alexander Hamilton, and his followers, then turned to the judicial branch for their power. The third branch of government had been added as if it had been an after thought, and was originally intended to be the weakest of the three branches. In fact, the founders were so worried about a tyrannical judiciary, that they proposed the 11th Amendment, ratified in 1795, which restricted the courts even more. The judicial branch was only to apply the law, regardless of their opinion of the law, to the cases they heard, and nothing more.

Though the courts were not given the authority to review law for its constitutionality, they did give opinions on the merit of the law. In fact, to this day, their dockets begin with the words: "It is in the opinion of the court." Despite not having the authority to review law for its constitutionality, often judges would give an opinion on the law after deciding the case. If a court found a law to be unconstitutional, the legislative would consider the opinion, but the law remained in force until Congress decided to repeal the law.

Out of respect for the higher courts, the lower courts would respect the opinion of the higher courts, and rule accordingly. After years of this practice, Chief Justice John Marshall, one of Hamilton's allies, in the 1803 case of Marbury v. Madison, provided an opinion that basically said that the federal courts have the power of judicial review.

Combined with his national bank and concept of implied law, judicial review completed a strategy that could be used to incrementally grow government, until one day the federal government could expand to a point in line with what Hamilton envisioned.

Despite Hamilton's lust for power, and his dream of a centralized federal government, Hamilton's undoing came through his feud with Aaron Burr.

Contrary to the documentary's urgings, Hamilton was not the father of capitalism, or at least not in a manner that would be recognizable today as anything other than crony-capitalism, fascism, and the authoritarian theory of Keynesian economics.

In other words, Hamilton in today's world would probably be a liberal Democrat.

-- Political Pistachio Conservative News and Commentary