How Alexander Hamilton Turned This Marxist into a Classical Liberal

How Alexander Hamilton Turned This Marxist into a Classical Liberal

By Robert E. Wright, Nef Family Chair of Political Economy, Augustana University, American Institute for Economic Research, Museum of American Finance, Historians Against Slavery, &c.

For ConSource’s Constitution Day Fundraiser at the Pierre Hotel, Manhattan, New York, 17 September 2019

In high school and as a Social Studies education major at Buffalo State College, I was a flaming Marxist. Proof, from my high school yearbook, is on the screen [SLIDE 2]. If Cassie calling me Karl with a K in addition to my real nickname of Moose and threatening to warn my college of the arrival of my spectre, a reference to the first line of Marx’s Communist Manifesto, is insufficient proof, the slide now on the screen [SLIDE 3] is brutally direct. Sorry to say, though, that unlike some people I can’t produce my annotated calendars, but if I could, they would reveal the exact dates that I attended Communist Party gatherings. Either I threw them out or never made them in the first place. You be the judge.

Today, I don’t recall who either of these people were but the second one was right. Not about me dying a commie pinko but about the vacuity of Marxism. Ten years after graduating from high school, I was an emerging classical liberal. By then, I held a Ph.D., a wife, and a toddler -- no need to get into details about the order. An old joke posits that anyone who is 20 and is not a Marxist has no heart, but anyone who is 30 and is still a Marxist has no brain. I like to think I possess a bit of both organs but to some extent I was mugged by the reality of the fall of the Wall and all.

Mostly, though, it was Alexander Hamilton who saved me from a life of Leftist lunacy. Some of you may still think of Hamilton as a would-be autocrat who espoused high tariffs and a big government and oversized national debt. Actually, though, he was a classical liberal, or, in today’s parlance, more Libertarian than Republican, and certainly no Trumpian. In fact, I fear that if Hamilton were alive today he would charge the Oval Office, bayonets fixed, and seize it as he did Redoubt Number Ten at Yorktown.

I am not pulling your leg about Hamilton saving me from communism and sundry other lame isms. I named my first-born son Alexander Hamilton Was … my last name, which is Wright. Again, proof is on the screen [SLIDE 4]. And just in case you think I forged his Social Security card, which isn’t difficult to do these days, here is more proof, from the Wall Street Journal, which, of course, is always right about everything [SLIDE 5].

Upon learning about my son’s name, and the names of my other two kids -- I kid you not Madison and TJ -- people often ask me, what was Hamilton right about? Just about everything, as it turns out, but that W leading off my name was not just a way of making sure that I was among the last called for everything, along with a handful of Yangs, Youngs, and Ziebachs. Double U R I G H T actually means a maker of things, as in cartwright or wheelwright. So Hamilton was correct about most things but more importantly he was a maker, specifically of this still great country of ours. Great as in Great War or Great Depression anyway.

As you can imagine, the only thing more thrilling for me than learning that the musical Hamilton was a huge hit was being invited to New York to watch it, and comped a ticket for one of Lin’s last shows after the big Tony award wins. In return, all I had to do was to write a review of the musical for The Independent Review. So I went for broke and reviewed it in verse and even included an extra scene, “What Bondholders Want.” Again, evidence is on the screen [SLIDE 6].

I composed a new scene because it was the only way that I could prove the thesis of my review, which was that Lin could have written an engaging musical that actually explained what specifically made Hamilton so important. I will perform it for you here tonight, for the first time in public, but with a few caveats [SLIDE 7].

First, I am not a rapper by trade or even by hobby, though I sometimes listen to some NWA, Biggie, or Eminem when in the mood. Second, the scene contains three different singers but there is currently only one of me, so I will use different voices for Hamilton, the Company, and Burr. For the Company, which refers to the entire cast, not a business entity, I will try to sound like the Spice Girls, for reasons that will soon become apparent to anyone who recalls the 1990s. For Burr, I will try to sound like Humpty Hump, the persona of rapper Gregory Jacobs and developer of the Humpty dance, which debuted in December 1989. As you can see from the album cover, now pictured on the screen [SLIDE 8], Humpty was something of a clownish figure, much like Burr. Finally, and most importantly, following the lead of The Spinners and other musical performers, not only do I give you permission to record my performance and put it up on social media, I beg of you to do so. I’ll put Lin up on screen [SLIDE 9] during this so you don’t have to look at Humpty the whole time and so you can imagine how good this would sound with him performing it.

**What Bondholders Want**

HAMILTON: Our humiliation was the government of the new nation

And its inability to pay our farmers, soldiers, or sailors

the proper remuneration, due to its distressed monetary situation,

a situation called bankruptcy that led mere individuals straight to the jailers.

When Continentals and other forms of fiat money lost all their worth,

because the rebel governments printed them in too much girth,

All that was left to do, was for officers and quartermasters to pay on cue,

using a written device that in common vernacular is called an IOU,

an evidence of a debt that could be kept or traded, for pennies on the dollar.

When the government didn’t pay the interest on time, bondholders began to holler.

COMPANY: What do they want, what do they want, what do bondholders really, really want?

HAMILTON: What bondholders want, what they really, really want is:

security

negotiability

liquidity

punctuality

and banality.

COMPANY: Bondholders want security, negotiability, liquidity, punctuality, and banality.

HAMILTON: They want security, negotiability, liquidity, punctuality, and banality.

BURR: They got their brain on their bonds, and their bonds on their brain.

It seems what they want is for it to rain, rain, rain, and never with any pain.

But how are you going to give the bondholders what they want?

COMPANY: One shot is all you’ve got, one shot is all you’ve got.

HAMILTON: One shot is all I’ve got, so on these policies I will bank:

tariffs, discrimination, funding and assumption, and a bank.

I’m going to give bondholders security, negotiability, liquidity, punctuality, and banality in the form of tariffs, discrimination, funding and assumption, and a bank.

COMPANY: One shot is all you’ve got, one shot is all you’ve got.

HAMILTON: One shot is all I’ve got.

COMPANY: Bondholders want security.

HAMILTON: Bondholders have no recourse to the sheriff.

To give them security we must tie payment to my tariff.

COMPANY: Bondholders want security.

HAMILTON: A tariff is just a tax on stuff imported from abroad.

A tax so easy to administer, taxpayers will not find it sinister.

When people see it in action, all they can do is applaud.

COMPANY: Bondholders want security.

HAMILTON: The key is to maximize revenue, so there’ll be some residue,

after the government has paid bondholders just their just due.

COMPANY: Bondholders want security.

HAMILTON: Paying bondholders as promised is the key to it all.

COMPANY: Bondholders want security.

HAMILTON: Anything less and the government will take a nasty fall.

BURR: Bondholders got their gains on their brains, and their brains on their gains.

HAMILTON: Bondholders also want negotiability.

COMPANY: Bondholders want negotiability.

HAMILTON: Discrimination, paying only the present holders of bonds owed by the nation,

supports negotiability, the ability to sell bonds and not worry about proration.

COMPANY: Bondholders want negotiability.

HAMILTON: The common law on this point is clear,

People who sell debt instruments for any reason, including poverty or fear,

Are not entitled to takebacks, even those who sold low after buying dear.

ALL: Caveat venditor!

BURR: On this point there can be no negotiation, bondholders want negotiability.

HAMILTON: Bondholders also want liquidity.

COMPANY: Bondholders want liquidity.

HAMILTON: Liquidity, liquidity, to buy or sell quickly is that ability.

COMPANY: Bondholders want liquidity.

HAMILTON: So as part of my funding plan, I took a cacophony

Of scores of different notes, I told bondholders to give them to me

In exchange for three new bonds called Deferred, Six, and Three

COMPANY: Bondholders want liquidity.

HAMILTON: We all know that when we assume, we make an ass of you and me.

But when the debts of the several states I assume, I make yet more liquidity.

BURR: Make the markets rain liquidity.

HAMILTON: Bondholders also want punctuality.

COMPANY: Bondholders want punctuality.

HAMILTON: That means making payments quarterly, right on the dot.

But sometimes tariff revenues do not quite hit the spot.

COMPANY: Bondholders want punctuality.

HAMILTON: That is why the Bank of the United States I did make.

To ensure the government never missed a bond payment for goodness sake.

COMPANY: Not by a single day, no matter what.

BURR: Pay them everything they are due, and always right on cue!

HAMILTON: Bondholders also want banality.

COMPANY: Bondholders want banality.

HAMILTON: That means that they like things slow and steady.

No revolutions, usurpations, armed forces at the ready.

Or anything that could cause panic, as in 1792, when into the maw

I stepped with a piece of new policy now called Hamilton’s Law:

Lend freely at a penalty rate to all with good collateral until the credit markets thaw.

BURR: They won’t cabal because they want it banal.

Cuz they got their brains on the rain, the precious, specious rain.

HAMILTON: Before I close, two myths I must dispose.

I discussed, but never said I wanted, a tariff of protection.

That lie was set forth decades later by a German named List,

who was a damned liar, or very British-style pissed.

I wanted industrialization, but sought it from another direction,

Paterson, New Jersey, and the Society for the Establishment of Useful Manufactures, y’all!

Finally, I am not some big debt freak.

What I said was quite unique.

A bigger debt, if not excessive, will be to us a blessing.

COMPANY: If not excessive, if not excessive.

BURR: Liquidity was the lettuce but cementing the union was the dressing.

HAMILTON: Every child, woman, and man who owns a federal bond,

Will protect the new government and never abscond.

**End Scene**

Thank you(!)? Had I received any encouragement, I could have written many such scenes. It’s not easy, especially when you have no talent and little experience, but it could be done. I’m going to spare you that pain tonight, though, by simply narrating the Founding, and Hamilton’s germinal role in it. Germinal, by the way, is the gender-neutral version of seminal.

To fully grasp the scene, the first thing you need to know is that the American Revolution was not at its root about taxation without representation, it was about a sudden switch of monetary and trade policy. Taxes were simply the straw that broke the colonists’ back. The University of Virginia’s Ron Michener and I realized that way back when I became his colleague in 1999, well before subprime mortgages or trade wars were major news. We were not reading the present into the past but rather were deep in a variety of primary sources all pointing in the same direction.

Critics found our mounds of evidence circumstantial but then one day in 2008 I found the smoking gun, not only miscatalogued by the New Jersey Historical Society in Newark but interleaved with another document penned twenty years later! Ever since, the executive director over there has blocked the smoking gun’s publication for reasons he never made clear to me. Fair use, however, allows me to share some of a transcript of it with you tonight [SLIDE 10]. The document verifies what Michener and I already knew, that the colonists were ticked off at the Mother Country because she drastically reduced the money supply following the French and Indian War by greatly reducing the stock of paper money, called bills of credit, and blocking colonists’ access to foreign trade and hence gold and silver coins. The rapid decrease in the money supply raised interest rates and depressed land prices, leading to a refinancing crisis in an economy where most mortgages ran only a year or two and ended with balloon payments.

Here is some of what the anonymous author of the smoking gun letter, written in mid-1768 in response to some unnamed Brits’ query about what was up the colonists’ keister, replied:

I must observe that it is not the Stamp Act or New Duty Act alone that had put the Colonies so much out of humour tho the principal Clamour has been on that Head but their distressed Situation had prepared them so generally to lay hold of these Occasions, and how they came to be so I must trace back to commencement of the late War. There was then little paper Money in the Colonies, but all Ranks lived frugally within what they got and there transactions and Dealings did not exceed the Currency among them, there Trade to England was small and they made Remittances by their West India Trade for the Country People in general were contented with their own Produce and Manufactures, the Price of Land was so low that they could soon pay for it out of what they raised … but mark the great Change a short Time produced.  … Extraordinary Levies, laid the Colonies under a Necessity of issuing Notes or Paper Bills of Credit payable in future Periods by Taxes, for to raise the Sum wanted within the year, or by Loan as in England, was equally impossible, but being secured by the Legislature to be sunk by future Taxes they never depreciated, but on the contrary when the largest Sum was current Viz in the year 1760 Exchange was 25 P cent lower than at present, or it took £25 less of our Paper to buy a Bill of £100 Ster^g on London than at present. … This money being plenty, both in Specie and Bills of Credit and Labour high, and Land high, the Price of every thing encreased People were not afraid of entering into deep Engagements equivalent to our Circulation, which being since called in by Taxes or remitted for Goods occasioned a sudden Stagnation, and by calling upon and suing one another brought many to ruin. … The Men of War are also expensive especially when so many are kept up. They are of no Manner of Use, but often cramp Trade by stoping and detaining Merchants ships and pressing their Men. … Another capital Greivance and Inconvenience to these middle Colonies is being restrained from issuing Notes or Bills of Credit … to recount our Distress for want of this Medium were Endless or by what unaccountable Policy G. Britain acts in the Restriction. … It must not be forgot that our Trade to the Spanish and French West Indies was laid under the severest Restrictions, and the Spanish Ships were even prevented laying out their Money in our Ports. O wise Grenville! To this miserable and discontented Situation were we reduced about the year 1765 and in November the ever odious and memorable Stamp Act was to take Place, which we look’d upon as equally inexpedient and illegal and which never could have been carried into Execution. … We are unfortunate that our Situation is not sufficiently known or properly represented to the Ministers at Home; it is true we have agents there but few of them are acquainted with our Circumstances, and when called upon seldom speak the Sentiments of their Constituents, and often insinuate rather what is agreeable than real. … the Colonies in general are composed of Emigrates from England who little dream’d they forfeited their Liberties while they extended the British Dominions.

What made the real estate boom and bust a big deal was that back then only creditors could discharge bankrupts and most were loathe to do so because creditors invariably owed yet others. Credit was very much a web, rather than a pyramid, and a voracious Black Widow spider sat its center because creditors could put bankrupts into debtors’ prisons where they had to somehow pay their board while they quote languished, or, worse, wallowed in idleness and profligacy unquote. Many died, the victim of a system designed to get debtors to cough up hidden assets and completely unprepared for a monetary and trade policy-induced real estate crash.

Banks did not step up to the rescue because the British did not allow the colonists to form joint-stock commercial banks. Devoid of effective intermediaries, without the power to issue government fiat money, and with trade routes that could have led to the importation of gold and silver coins blocked, the colonists could only limp by on trade credit, commodity barter, and innovative instruments like the squirrel scalp bounties that circulated in Bucks County north of Philadelphia in the latter half of the 1760s.

By the time the young Hamilton, now pictured on screen [SLIDE 11], arrived on the mainland in 1772, the dispute between the colonists and their Imperial overlords had further intensified. Hamilton soon proved himself a prolific writer by entering the evolving debate with a series of pro-Patriot essays steeped in classical liberal ideas, including limited government.

Hamilton of course played a major role in the war, both on the battlefield and as one of General Washington’s closest advisors. Even in the throes of the long conflict, Hamilton strategized about future policies and governance structures. With peace came continued national bankruptcy, domestic insurrection, and economic recession. With a little help from his friends, he swept that all aside and established the nation’s modern economic growth trend, now pictured on screen [SLIDE 12]. The per capita economic output data, stated in real or inflation-adjusted terms, is rendered on a log scale so that the rate of growth can be discerned by the eye. The greatness of the Great Depression and World War II are readily discernible, but most recessions appear as mere blips in the overall story of America’s economic growth, the red trend line. Even the Depression eventually succumbed as the economy returned to its long-term trend. Several economic historians have shown, in different ways, that the return to trend would have occurred even without World War II, but that is a story for another evening. Note that after Hamilton’s time, the economy performed under trend for a long time. That was due to suboptimal policies, including slavery and protective tariffs, of which more a bit later.

I shudder to think that my 20-year-old quote unquote commie Pinko self was prepared to walk into middle and high school classrooms and tell students that the Revolution was about taxation without representation, Washington was the hero of the Revolution, Madison was key to the Constitution, and Jefferson and his Revolution of 1800 saved the early Republic from the little, evil monster Hamilton. Thankfully, I stank at teaching yutes and my master mentor teacher suggested that in lieu of finishing student teaching I get a degree in History and go to graduate school for the same. Once there, I started reading primary sources for myself and enjoyed epiphany after epiphany. Hamilton, it turned out, was no elitist. He was a poor immigrant, a point – spoiler alert -- that Lin’s musical does make amply clear. Like any classical liberal worthy of the name, Hamilton did not seek special privileges for favored groups but sought instead to lay out the fundamental principles of liberty for all.

Unlike the Lord of Monticello, Hamilton opposed slavery, an institution that classical liberals came to find appalling. Hamilton’s record as an abolitionist was imperfect, but better than most of his contemporaries. Had Hamilton died of old age, I am convinced that he would have elucidated the thesis that I set forth in the book now pictured on screen [SLIDE 13], to wit that enslaving others creates negative externalities akin to pollution. Slavery, in other words, is profitable for the enslaver but an impediment to overall growth and development. It therefore essentially impoverishes everyone to some degree, except the enslavers who manage to reduce the costs of controlling slaves with sundry public subsidies like slave patrols, public whipping posts, and fugitive slave acts. With the distinction between private profit and overall economic growth and development clearly in place in the early nineteenth century instead of the 1850s, the Civil War may not have occurred at all, or it may have erupted in 1820 instead of the Missouri Compromise, or in 1833 in response to the Nullification Crisis.

When Hamilton called for a president-for-life, he was thinking carefully about incentives. A president-for-life would be concerned with implementing long-term policies, not winning the next election. The Founders applied Hamilton’s reasoning to members of the Supreme Court, who serve life terms. Later, policymakers mandated single, long-term appointments for certain key positions, like Federal Reserve governors. President-for-life sounds appalling today only because the presidency has grown so powerful. Had we gone Hamilton’s route, you best believe that POTUS would be checked much more heavily than today. A president-for-life would almost certainly not have tariff authority, for example.

Contrary to myth, Hamilton did not believe in a BIG national government. Time and again he made clear that he wanted an ENERGETIC government, one that could fulfill its limited mandate completely at the least possible cost. He wanted efficiency, not size. On screen now is the cover of a book that firmly establishes this point [SLIDE 14].

Hamilton also did not believe in the perpetuation of a huge national debt. Those who quote him as saying that a national debt would be a blessing leave out a crucial qualifying clause: quote if it is not excessive unquote. He specified in detail what an excessive national debt would look like and, brothers and sisters, I am chagrined to report that we have one today because we gave up on Hamilton’s unwritten fiscal constitution during the Nixon administration. It is now completely moribund, as the book now pictured on screen details [SLIDE 15]. The main gist of the Fiscal Constitution was that during times of peace and prosperity, the national debt was to be paid down in nominal and real terms. During recessions, federal government budget deficits were to be kept below the average rate of economic growth. Large deficits were allowable only to fight wars or obtain territory but when peace returned surpluses were to be applied to the debt, not to concocting new areas of spending. These rules were easier to follow, Hamilton showed, when each new bond issue was tied to a specific tax sufficient to service and eventually extinguish the debt.

Unlike most of his contemporaries, Hamilton was a debt realist, a point clearly established by the book now pictured on your screen [SLIDE 16]. Some believed the national debt, at least that part owned domestically, was not a problem because it was money that Americans quote unquote owed to themselves, which didn’t make a whole lot of sense to people paying taxes to service bonds owned by others. Some believed that all government debt was morally wrong, an imposition on future generations, so the national debt should be paid off as quickly as possible. Hamilton reasoned that a debt incurred to win a just war or to acquire new lands was no imposition but to spark a recession by ramping up taxes merely to repay the debt quickly certainly was. So his debt repayment plan called for slow and steady.

Moreover, Hamilton realized that federal bondholders cemented the Union by rendering them loyal to their debtor, a point carefully proven in the book now on your screen [SLIDE 17]. The looney who wrote it actually tracked down the residences of many of the nation’s early bondholders, which he was able to do because the bonds were registered and not bearer instruments. He also tracked down the occupations of over a hundred federal bondholders who lived in Jefferson’s Virginia. The foreign debt likewise served to align the interests of foreign nations with America, a point that all those who decried our debt to Britain then, and Japan and China more recently, too oft forget.

Most interestingly of all, perhaps, I learned that Hamilton did not implement, or even espouse, protective tariffs, a point forcefully made by the three books now pictured on screen [SLIDE 18]. Hamilton’s tariffs were all about the revenue. In other words, they were designed to fund the government, and especially to service the national debt, not to encourage manufacturing. Following Adam Smith’s notion that all that was requisite to spark economic growth was peace, easy taxes, and a tolerable administration of justice, Hamilton opted for the easiest taxes to collect, those on imported goods. His tariffs exempted many foreign goods used as inputs in domestically-produced goods and imposed progressively higher levies on imports according to their elasticity of demand, or the degree of their luxuriousness in the parlance of the day. Foreign-made carriages and fancy liquors, for example, bore higher tariffs than common fabrics.

Hamilton imposed excise taxes on domestic whiskey production in order to discourage its production given the relatively high tariffs placed on the foreign stuff. His Report on Manufactures makes this clear. It also makes clear that, unlike his previous reports on public credit and the national bank, the report was more of a primer, a lesson in the economics of international trade. It makes no sweeping recommendations for legislation but rather discusses the tradeoffs involved in interfering with international trade and correctly identifies production bounties as the least costly method of encouraging domestic manufacturers, and argues that they should be implemented if, and only if, that was something that Congress wanted to do. But tariffs, subsidies, and other distortions of trade, Hamilton makes clear in the report, are merited only in a second-best world, one, in other words, in which other countries impose high tariffs first.

Contrast Hamilton’s Report on Manufactures with his Report on a National Bank and you will see exactly what I mean. In the latter, Hamilton laid out very specific reasons for establishing a central bank, detailed its structure, and specified its goals, which included providing a backstop in the event that federal revenues ever fell short of the sums needed to service the national debt. You will sometimes see scholars describe the Bank of the United States as a quasi-central bank because it did not have the same degree of monetary policy discretion that central banks do today. That is true because Hamilton put the U.S. on a bimetallic standard. Indeed his Report on the Establishment of the Mint led directly to the Mint Act, which defined the dollar as specific weights and fineness of gold and silver. Although the Bank of the United States could signal its desired monetary policy stance to state banks, which had grown rapidly in number and importance since the end of the Revolution, by the speed with which it redeemed their notes for gold and silver, it allowed international market conditions to determine the domestic money supply and interest rate.

Of course, at the time the Bank of England and the world’s few other central banks did likewise. So, I don’t consider the Bank of the United States a quasi-central bank, I consider it what it was, an eighteenth-century central bank, and that was no mean thing. In addition to servicing the national debt when revenue tariffs fell short and acting as the federal government’s main depository and paying agent, the Bank of the United States also acted as a lender of last resort during financial panics, like those experienced in 1791 and especially 1792. What is commonly called Bagehot’s Rule should be called Hamilton’s Rule because Hamilton was the first to stymie a panic by having the central bank lend freely at a penalty rate to all who could provide ample collateral. Unfortunately, he never wrote a book about it.

I like to stress Hamilton’s Rule because some of those rational enough to accede to the points all these books shown on screen make still like to retreat to the claim that all Hamilton did was to copy British precedent. In fact, Hamilton did not adopt British financial precedents, he adapted them. Adoption of foreign institutions rarely works well. Just ask the newly-formed Latin American republics that adopted the U.S. Constitution or the Indian tribal governments induced to adopt American municipal forms in the early twentieth century. Hamilton’s intelligent adaptation of foreign financial practices and institutions, however, saved the early U.S. republic from many embarrassments that could have led to its dissolution.

Hamilton also astutely adapted British legal practices to America’s legal scene, a point well made in the book now pictured on screen [SLIDE 19]. What that otherwise wonderful book misses, though, is Hamilton’s contribution to corporation formation and governance. He showed that if need be businesses could voluntarily associate instead of formally incorporate and still enjoy the two main benefits of formal incorporation, limited liability and perpetual succession, by contract instead of by law. Facing such competition, legislators in most cases were not unduly stingy with special acts of incorporation. In fact, the book now pictured on screen [SLIDE 20] shows that over 22,000 businesses received formal special charters in the U.S. before the Civil War. Incorporation became so easy, in fact, that general acts of incorporation were already becoming the norm in the antebellum era and of course are the standard today for both for- and non-profit organizations.

My forthcoming book, Liberty Lost, will detail the importance of non-profits to America’s democracy and provide the first count of all those that received special acts of incorporation before the Civil War. It appears that specially-incorporated non-profits actually outnumbered for-profits. DeTocqueville was right, without the capital W.

Ease of incorporation also plays a germinal role in my most recent book, now pictured on screen [SLIDE 21]. Thanks to the ease of incorporation made possible by Hamilton’s adaptation of British common law to American realities, groups excluded from financial institutions and markets could, and often did, simply form their own. Artisans, blacks, farmers, Hispanics, Jews, immigrants, Indians, mountain folk, women, and other excluded groups all eventually entered the financial services market and failed, survived, or thrived on the merits of their respective business plans and their execution, all thanks to seeds planted by a so-called elitist monarchist economic nationalist! The abolitionist immigrant Hamilton was really a champion of the common person, competitive markets and institutions, and effective government.

By drafting several early important charters and by-laws, including those of the Bank of New York, the Bank of the United States, and the Merchants Bank, Hamilton also helped to establish rules of corporate governance that U.S. corporations used to great effect for over a century. Early U.S. corporations were basically mini-republics replete with checks and balances designed to ensure that major stockholders and managers could not expropriate the resources of minority stockholders, many of whom were minors, women, or busy businessmen. Mistakes were made, even with Hamilton’s own Society for the Establishment of Useful Manufactures, but they were relatively few and minor. Confidence ran so high, in fact, that investors purchased shares in mere startups in unintermediated direct public offerings. Well, technically, again thanks in part to Hamilton, they purchased call options on shares, which they paid for in instalments as the newly-formed corporations geared up operations and achieved identifiable milestones.

I say thanks to Hamilton in part because there were, as the book now on the screen makes clear [SLIDE 22], numerous financial founding fathers, including Thomas Willing, the first president of the Bank of North America and the first president of the Bank of the United States, and his partner Robert Morris, the so-called Financier of the Revolution. Their stories are also interesting and complex. Maybe one day I will compose a musical starring them, or Albert Gallatin or Stephen Girard, or maybe the entire ensemble of financial founders. That story would be set in Philadelphia, America’s first financial center and the subject of the book now pictured on the screen [SLIDE 23]. Or maybe not, as I am currently hot on the trail of Wilma Soss, a postwar feminist, corporate gadfly, radio journalist, economic pundit, and financial literacy advocate whose life is worthy of more than the biography I am currently writing with Bucknell’s Jan Traflet. Saucy Soss is now pictured on the screen [SLIDE 24], as is an advertisement for the movie made about her in the early 1950s called The Solid Gold Cadillac. In any event, I promise not to appear personally in anything requiring singing.

Thanks so much for your time and attention. These remarks and slides will be posted on my blog, Finance: History and Policy at http://financehistoryandpolicy.blogspot.com/ which is now pictured on the screen [SLIDE 25].

I’ll now entertain your questions with what I hope will be entertaining responses.