History / News

Debate on Hamilton’s Economics Begins

By Nancy Spannaus

Oct. 2, 2019—My series of book talks on my book Hamilton Versus Wall Street: The Core Principles of the American System of Economics has begun, and hopefully it’s just the beginning of growing process of public debate. The American people have to be educated on the American System of Economics!

Debate on Hamilton's Economics Begins

The author at Cascades Public Library, Sept. 30.

Over the past months, I have had a number of book-signing events, but my first speaking event was held at the main Frederick County (MD) Public Library on Sept. 25. A core group of eight people came, and were totally engaged. All seemed to be rather familiar with Hamilton already, but they undoubtedly learned a lot about how his economic policies, especially those in his Report on Manufactures, spread, both in subsequent generations of Americans and internationally.

The second event occurred two nights ago in eastern Loudoun County, my home county, at the Cascades Library. Sixteen people attended this event, and it occasioned a lively discussion. Two further events are planned for October: October 9 at the Four Seasons Bookstore in Shepherdstown, West Virginia (7 pm), and Oct. 28 at the Purcellville, Virginia public library (7 pm). All are free and open to the public.

Of special interest in the discussion period in Cascades was the content of the conflict between Aaron Burr and Hamilton, which I elaborated on by reviewing the story of the origins of the Manhattan Bank. (JPMorgan Chase’s official history traces itself to the founding of the Manhattan Company in 1799.)

The topic arose because I noted how appropriate it was that the pistols which Hamilton and Burr  used in their duel are now housed at the headquarters of JPMorgan Chase. Why? Therein lies the tale.

The following exposition comes directly from Hamilton Versus Wall Street. It serves to illuminate the fundamental difference between Wall Street banking and Hamilton’s American System conception, as well as Hamilton’s conflict with the amoral Burr, who was a willing agent of corrupt banking practices. For more, you can order the book at www.iuniverse.com/bookstore, or on Amazon.com.

The Manhattan Company–`A Perfect Monster’

The genesis of Chase Manhattan Bank (today’s JPMorgan Chase) provides a striking example of the difference between Hamilton’s concept of banking and that of his financial adversaries on Wall Street. In 1798, New York City, like other cities in the nation, was ravaged by a Yellow Fever epidemic. The devastation called attention to the state of the City’s water supply and system, which was dependent upon often-polluted wells and thus was held in part responsible for the spread of the disease. In response, two proposals were brought before the City’s Common Council—one for a public water system and the other for a private system; both would bring fresh water from the Bronx River.[1]

Debate on Hamilton's Economics Begins

Aaron Burr (daily.jstor.org)

Behind the plan for the private system was none other than Aaron Burr, at that time a prominent representative of Thomas Jefferson’s Democratic-Republican Party in the state. Burr solicited the support of leading Federalists, including Hamilton, for his plan for a “water company”; with this political leverage (the Federalists being in control of the New York State Assembly at the time), the Manhattan Company was able to gain a charter from the state in April-May of 1799. The Company’s elaborate plans for a new city water system, including sewers, draining swamps, and providing the new water source, had been drafted by Alexander Hamilton himself.

But Burr had no intention of using the new company to improve the City’s water system. His aim was to use it as a ploy to authorize the establishment of a new bank, to compete with the Bank of New York and the New York City branch of the Bank of the United States. To this end, he included in the fine print the following language: “that it shall and may be lawful for the said company to employ all such surplus capital as may belong or accrue to the said company in the purchase of public or other stock or in any other monied transactions of operations.” The unsuspecting Federalists failed to notice until it was too late, and the charter had been approved by the New York State Assembly.

By no later than September of 1799, the ruse was fully exposed when the Manhattan Company opened an “office of discount and deposit” on Wall Street and commenced operations as the bank Burr had intended. The bank then proceeded to issue loans to the benefit of the Democratic-Republican Party, as well as its financiers.

The plans for a new system of waterworks from an unpolluted source were discarded.

In an 1801 letter to Sen. James Bayard during the stalemate between Burr and Jefferson for the Presidency, Hamilton used the incident as an example of Burr’s character: “He has lately by a trick established a bank, a perfect monster in its principles, but a very convenient instrument of profit and influence.”

Those principles, as shown in action, were to eschew investment in the physical health and welfare of the population; to lie, cheat, and steal in favor of personal profit. Those are the principles which have in fact characterized the successors of the Manhattan Company—the Manhattan Bank, the Chase Manhattan Bank, and now JPMorgan Chase—to this very day.  No wonder it is JPMorgan Chase which holds title to the very pistols used in the Burr-Hamilton duel, and proudly displays them in its lobby.

Debate on Hamilton's Economics Begins

These pistols, used in the duel which killed Alexander Hamilton, are appropriately displayed right outside Jamie Dimon’s office in New York. (New York Historical Society)

I have no doubt that, if Hamilton had a chance, he would move to crush such major Wall Street speculators today.

If you know of any opportunities for me to speak about my book, please contact me through this blog, or at nancyspannaus@comcast.net.

[1] A detailed description of the circumstances around the founding of the Bank of Manhattan can be found in Ron Chernow’s Hamilton biography.

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