Spending and Saving

Forget the Benjamins. Hamilton is Back.

We’ve just been poking around the West Indian island of Nevis, the birthplace of Alexander Hamilton. This man knew a little something about money, and there’s a renewed interest today in his prescient ideas about the American economy.

Alexander Hamilton was the first US Secretary of the Treasury, a Founding Father, economist, and a bit of a rake. He was a thoroughly modern man who envisioned a strong federal government and a strong treasury, a national banking system, a stock market and foreign trade policy that balanced openness with protections. He also favored an economy mixed between agriculture and manufacturing, unlike his rival Jefferson, who wanted an agrarian republic. Hamilton didn’t want us to put all our eggs in one fiscal basket. He also warned that America needed to make stuff or we would always be dependent on other countries. Real wealth, he thought, was only created when somebody makes something. Helloooo! Score one for Hamilton.

The strong-government slant made Hamilton unpopular with Reagan Revolutionists: Senator Mitch McConnell actually pushed to replace him with Reagan on the ten dollar bill. Inveterate free-traders have tended to brand Hamilton’s views on foreign trade as “protectionist.”

Hamilton was a prophet of the capitalist system and believed in the power of the market. But he knew that greed would unleash its grasping tentacles if government didn’t play a crucial role. Score another one for Hamilton. Quoting Hamilton in his March, 2008 address at Cooper Union, then-Senator Obama noted that Hamilton balanced his belief in the market “with a conviction that human enterprise, and I quote, ‘may be beneficially stimulated by prudent aids and encouragements on the part of the government.’”

As the first treasury secretary, Hamilton inherited a bankrupt nation, but was able to get our young nation back on firm financial footing. Some blame him for starting American national debt, but others, like Matt Miller, see his ideas about protecting American industries and workers to be essential for reinvigorating the economy. Bloggers are talking about Hamilton and his ideas concerning government support of infrastructure and manufacturing in relation to the stimulus package.

The boom days were all about the Benjamins. But that Hamilton in your pocket deserves a closer look.

Tags: Alexander Hamilton, economics, fiscal policy, trade