A talk titled the hamilton scheme, enemies and allies in the american economy, author and scholar William Hoagland discusses Alexander Hamiltons ideas. This is about 15 minutes. While the gallery of museum is closed because of a flood we sustained, but our robust programming continues as evidenced today. Our author speaking is William Hoagland, he has written multiple books on early u. S. History, including bottom of the black sneak, declaration, the whiskey rebellion, and founding finance. He is also the author of a recent contributor, i should say, of a recent publication of historians on hamilton. He has also penned many essays and articles you can read in places like the atlantic monthly, salon, boston review, huffington post, but none more important than our own magazine, financial history. You can find that on our website. It should be no surprise that the topic of williams next book is Alexander Hamilton. It is my pleasure to introduce him. [applause] thanks a lot. I know the acoustics in here boom a little bit. Can anyone hear me . That is good to know. I think some of you know that maybe it is a little bit i am a little bit of a fish out of water here. I would like to point out that the museum of American Finance has had me speak, this is my third time. My first talk on Alexander Hamilton and related issues was sponsored by the museum. That was for my first book in 2006. I think some of you already know, it is celebrate hamilton time right now, and celebrate is not exactly what i do, generally speaking. Those of you who know my work know that i think critically and write critically. I write and think critically about everything because that is how i think. People sometimes think because i am not celebrating that i am filled with hatred for these people i write about. You dont spend your life in the company of these people because you hate them. Nonetheless, for those of you who do not know, you will note the irony of some of my approaches. Here we are in the federal building, and here we are on wall street. We could say we are conveniently located right now at the corner of money and government. What i want to talk about is how hamilton began to form those connections between money and the u. S. Government. I do not talk so much about some of the things that have sparked such great interest lately, for the obvious to reason of the phenomenal cultural event that is the musical. I dont talk about dueling, i dont talk about his relationships with his family members, i dont talk about his infidelity. I feel like a lot of people dueled, i think a lot of you know that, i figure have read about it, hopefully, in joanne friedmans book. A lot of people have family relationships and upbringings and all of the things that people have. I am interested in what made hamilton a Dynamic Force that he was, that was not like what everyone else did, if you know what i mean. I am looking very specifically at what i guess i would call the great sort of creative phenomenon that he was, that occurred at a certain time. I will dat it 17821795. You could dated a little date it a little differently. Im going to take that period. Something happened there, of course with everything that went into his life before he arrived in the Continental Congress, he brought all of that baggage and inspiration and everything that made him, but something happened that was different from what everything from what everyone was doing. He was not alone, but things he saw that others did not necessarily see. Dreams he had, visions he had that others did not necessarily have. Some were very much opposed to this. He saw nuts arent and bolts on a level i dont think anyone else saw appeared and then there were the lengths he went to an action. Sometimes, quite unsettling lengths i think, to bring those things about. The decisive effects he had on the founding, and how we think about money and government today is what fascinates me about hamilton. To me, its almost like he gets born in 1782, the phenomenon i am talking about, the Creative Force im talking about starts about there. Im looking at the arc of an action, not just thinking and ideas, but an action that has some very compelling drama to it, some of which, is as we say today, is highly problematic, but without which we might not be here as the nation that we are. In a sense, hamilton created the nation. In an economic sense. The thing is, the details of that story get left out. You would not think they get left out, it is the reason he is famous, secretary of the treasury. You would not think they would get left out, there have been a lot of biographies of hamilton, and yet they do get left out because people not here, the museum of American Finance, necessarily, but people do not necessarily like to hear the words the economic nation, or the word finance. I am writing a book on this subject and my agent said to me when i was pitching it to him, i would say, the financial he would say, dont say finance. We are trying to picture a book here people might want to read. Dont say finance. I am like, ive got you. Every once in a while, the buzzer goes off when i see the word. Hamilton would use the word, that the connotations with that are not his. To hamilton, this is money, power, wealth, greatness, size, scope, expansion. Things that are actually highly active and dramatic. Greatness. I mean like dominance. Making the nation into america, the empire, that is a word he and many of his contemporaries would use. Making it into the great thing that he envisioned early that it could be. When you say economic nation, to him, that is the nation. That is the nation in a lot of ways. And in a lot of ways, i think he was right about that. What gets left out when people say, he did all of these things, but it kind of gets buried in all of the other things about his life, i call it for the purposes of this talk, something we could describe as the hamilton scheme. I think i have water here somewhere, yes i do. The hamilton scheme. Scheme is obviously a loaded term. It can mean a plan, any sort of plot of something, a schema, it can be value neutral. We also use it to mean a scheme, he is scheming in the backroom, my nefarious plans. When we talk about hamilton, we have to talk about that he had a major plan, it goes beyond the plan, it does intubation and a nuts and bolts to build the country so that it could do the things he wanted it to do. But other people saw it as a scheme of corruption, a scheme designed to destroy democracy. So the various uses of the word scheme i throw in here just because i think in this room, no doubt, and if you talk to people outside of this room about hamilton, you will get a wide variety of of use. Whether it was a scheme in a good sense or bad sense. So that is what i want to try to tell you about today, how the scheme worked. And you can all think about, you probably have before, what kind of scheme you think it is. When i set up an invitation to this talk and description of what i would be doing, i promised an efficient forty fiveminute trip through everything you would need to know about the hamilton scheme. I realized as i approached the talk, that was a slight exaggeration or a boldfaced lie, he give there is no way in the time we have today that we can do a deep dive on anyone of these topics. What i am going to do now that i have lured you in here, im going to give you a superficial sense of what the various topics are. Anyone of them at various times, maybe we can do a deeper dive and i can backup some of the things i am saying rather than just saying them, which is what im going to do today. Realize the sales pitch was a sales pitch and we are going to get a more general view of what i think the hamilton scheme involves. One thing that is funny, since he became treasury secretary under washington and put his scheme into effect in the first half of the 1790s, but im going to focus today much more on the 1780s because that is when he developed the scheme and thats when the issues that drove him and the opposition to it began to form, and the tension we still have today in society between money and government started to form. While there is a lot to say about what he did in the 1790s, to get at what he was trying to do in the 1790s, you have to go back to his first efforts and politics in the 1780s, i think. And see him develop it and figure out what is going on, if he could ever get himself into a position to bring it about. Somewhat surprisingly, i will be focusing largely on what he did in the 1780s to develop the scheme. He comes to the Continental Congress right after his service in the war, the revolutionary war, the war of independence, and this is some thing i dont really talk to much about, yorktown. Everyone knows about it now, and the defense of the redoubt. To me, that is like juvenilia, now he comes to do what he is really going to do what other people could not do. He comes to the Continental Congress, which at that time was meeting in philadelphia. Interesting because the war is going to be over quite soon. With the war almost ever, the revolution almost ever, victory in a sense on the horizon, what we might think, and out of this, this great victory, comes the fantastic building of nationhood, a country will emerge full unified and ready to take on the world. What is actually happening as he arrives in the Continental Congress, because the war is about to end, the country is about to fall apart. That is because what is holding the country together, these various states, various entities, they are confederated, they are not a nation. What is holding them together has been this war. The unity of the country is around this war. What hamilton sees when he comes to congress is that it is about to crash and burn. And there is such a potential to do something different, to pull it all together and create an amazing, new phenomenon. An expanding, pure phenomenon. That is an outlandish thing to envision for a 20 somethingyearold man arriving with his elders and superiors, many of them committed to different visions at that time. But he began to see it. He was not alone in that, he had a mentor in that vision, Robert Morris. A name that while it is known, at the museum of American Finance, is not widely known by the people who watch the show or read biographies. Morris is a problematic character for a lot of reasons. I think he is hamiltons most important mentor in the area i am interested in. Of course, there are other areas of hamiltons life. This creative period. But morris is sometimes a difficult character to deal with because he spent his vast wealth on financing the revolution out of this pocket, some people would say the revolution also financed him. He did not have a problem with mingling private and public funds. He was probably the richest men in america, casually corrupt, obese, witty, charming, and quite a character. Really the first major banker the country had. This was someone who saw the brilliance of young hamilton, and to whom hamilton gravitated. They were looking at the issue of how to keep the country together, and what were really talking about here is how to keep the country together as a political force, but the way they cite, and this was the genius the way they saw it, had to do with keeping the country together as a financial phenomenon. What they were talking about here is what is known as the revolutionary war debt. Which is to say, it is an incredibly complicated topic, and when i study it, smoke comes out of my ears as i try to get a handle on all of the aspects of the debt, but the country needed money to fight the war. The part that morrison and hamilton were interested in took the form of bonds issued to a small number of very wealthy people of the Robert Morris type, who were expecting, hoping to get paid 6 interest on their bonds. There was no tax on that at the time, a nice rate of return. That was supposed to finance the war. This was an interstate kind of investing class, lending class. The merchants, the people with actual money in gold and silver, or the equivalent in possession. So the war debt, and this is what is fascinating with people talk about debt now and hamilton, the war debt is pulling the country together as far as the people who envision a future for the country. You have all of the richest people in the country, or many of them, invested in these bonds. So it is funny to think about National Unity being equated with war and public debt, but that is the way they looked at it for obvious and cogent regions cogent reasons. What people say about hamilton frequently is he was confronted with all this debt after the revolutionary war as treasury secretary and he had to wrestle with this and get it paid off because they had to spend all this money. That is the opposite of what happened in the 1780s. As you probably know, hamilton is responsible for funding the debt, and assuming all of the state debts. Hamilton funding assumption. Funding a debt and paying off a debt are not the same thing. They are in some ways opposites. We know this when we make payments on credit cards, we are not paying them off when we make the minimum payment. This is a funny thing that has happened to hamiltons legacy. It is not just that most people dont get it. I will read you something quickly from the internet. If you put in a few search terms around hamilton, debt, etc. , you can get this. Paying for the revolutionary war was the start of the countrys debt, true. Some of the Founding Fathers formed a group and borrowed money from france and the netherlands to pay for the war. That is also true, that is where that entry stops on the war debt. John adams went over there, he negotiated, blah blah. The foreign debt is not the important part of the debt. The domestic debt is what drives all of the issues we still do with today. It was substantially larger in numbers and overwhelmingly more important. But the fact that some website gets this wrong should not surprise anybody, except that this website is called treasury direct kids. It is supposed to educate kids about debt and fiscal matters. It is the bureau it is the department hamilton founded. It is describing his approach to debt in wrong terms. What fascinated him, what got him up in the morning to us, might sound boring, public debt. It was a thrilling opportunity and a domestic debt, the debt to rich americans that was the driver of everything i have been trying to talk about. Here are some liberal scholars writing a piece about something unrelated. Theyre trying to fill you in on the background of hamilton and debt. They say the most pressing issue is what to do about the new nations debt. Continental congress and individual states accumulated massive debts during the war. Hamilton, now secretary of the treasury, wanted the new federal government to assume the statesdebts and pay them back in full this sort of general sense of he came into office, we have run up so much debt and i have to pay it off. I dont know exactly where that comes from. If he heard that we were saying things like that he would be like wow, all of these years later and they still dont get the brilliance of what i was trying to bring about. I dont know how he would feel about that but i find it fascinating that we dont want to know about his real relationship to the debt. He didnt try to hide it it was not scheming. He put forward in a brilliant manner and entire Program Based on this very idea. That is weird. Now, the risk to all this visionary stuff that they were working on, a central bank, federal bonds, getting the state debts into federal hands as well. Coalescing this massive Economic Force through government. The threat to all of this in the 1780s is guess what . Peace. The absence of war. What is the Congress Going to do, they think they are sovereign entities. They are not going to make good on these bonds. They might ignore them or cancel the debt. Peace is definitely a problem, to the extent that Robert Morrisassistant wrote a letter to general washington requesting that he keep the war going a little bit longer. The idea frequently with Robert Morris was when he was able to get requisitions and get money, pay the bondholders. It was not about paying the soldiers any troops. Pay the bondholders. If you do not pay the bondholders, if you force the bondholders to take too big of a haircut, anarchy will prevail, stability will falter. First you pay the bondholders. That is i you keep things together. This is an idea that Robert Morris had. The idea was to get a tax going. A national tax. There was no nation, but a National Style tax. Get the states to agree to go beyond the powers they were granted in the articles of confederation. And impose an impost they called it on imported goods. He told them it was just the beginning. If we can get them to do that we will have other kinds of Domestic Taxes as well as. This is the vision for forming nationhood. You can tie it together by collecting in an interstate manner, taxes earmarked for federal bonds. That doesnt sound exactly what we think of when we think of a unified nation. That is what they thought would gather up all of this Economic Force, all of this wealth, all of this power, and make it grow and become dynamic. That is a really skeletal idea of the things they began to develop in the 1780s. Hamilton fought in a far more nuanced way than morris could have probably. Put into effect in the 1790s, i will check with my watch and see how we are doing. I will sip some water. In 1783 this is hamilton to my mind. I see him being born in 1782, which is why conceit about this whole thing. His first formative Political Action on a countrywide stage was to involve himself in a conspiracy. It was to threaten the Continental Congress, to threaten the states with a military coup in order to bring about the very scheme i described. This is fortuitous in some ways. The officer class had not been paid, they were very fed up about that. They sent officers to philadelphia to demand payment. Hamilton and morris and their crew were finding it very difficult to get this tax pass