By Nancy Spannaus
Jan 23, 2020–“The inventor of the dollar hated the speculators,” read the headline of an interview with this author that appeared on the Economy and Jobs page of the Italian daily Avvenire on Sunday January 19. Journalist Leonardo Servadio’s article focused on my book, Hamilton Versus Wall Street: The Core Principles of the American System, and appeared, significantly, on the eve of the annual Davos World Economic Forum, which was to begin a mere 240 kilometers north of Avvenire’s home base in Milan.
Avvenire is owned by the Italian Episcopal Conference of the Roman Catholic Church. It has an estimated circulation of 110,000 to 120,000 issues per day and is the only Italian newspaper whose circulation has been growing in recent decades. Servadio writes regularly for Avvenire, and edits a blog called Frontiere, Revista de Geocultura. He posted a review of Hamilton Versus Wall Street on Frontiere in July of last year. I was interviewed by him in August.
The full interview, translated and slightly edited by me, appears below. It was published with a small thumbnail picture of me.
“The Inventor of the Dollar Hated the Speculators”
By Leonardo Servadio
“Certainly, a musical like ‘Hamilton’ can also be useful; probably in ways its authors didn’t intend,” says Nancy Spannaus, author of Hamilton Versus Wall Street: The Core Principles of the American System of Economics. (iUniverse, 222 pages, $13.99), published in the United States. The musical Hamilton has reaped success on Broadway for four years now, but Spannaus does not seem to believe it does justice to Alexander Hamilton, one of the Founding Fathers of the United States. Why? “It banalizes him. After having read the biography by Ron Chernow, which Lin-Manuel Miranda used as the outline for his musical, I think I can say that neither one gives a true account of the historical importance of Hamilton. But the virtue of the musical is that it has brought attention to Hamilton, and driven many young people and students to study his works.”
What is the truth about Hamilton?
He dedicated himself to overthrowing the British imperial system and fought in the American Revolution from 1776 on at Washington’s side. But, unlike so many others, he understood that, to reach the full independence, the United States had to organize an economic system in which the government was able to generate credit for building the economy, helping scientific and technological progress, and promoting labor. For this purpose, he established the First Bank of the United States in 1791, and in his Report on Manufactures, he elaborated the principles on which he founded it. That is what he called the “American system of economy,” which is distinct from the British system.
Wall Street seems to appreciate him; Why do you present him as an adversary of the stock market?
To manage the debt accumulated during the course of the Revolutionary War, Hamilton created a national currency (before that, many currencies were circulating) and established the financial market. The First National Bank was designed in such a way as to encourage those who already held government debt to reinvest in the Bank, and through it, the nation. The system functioned thanks to private funds, but under conditions defined by national policy. It was successful, and the investors made a profit. For this the speculators (there have always been such) praise him as if he were their champion. In reality, he considered them to be gamblers.
How did he succeed in freeing the United States from the war debt?
Every one of the former American colonies which had taken part in the Revolution had its own war debts. Hamilton collected them into one federal debt. Thus, the nation as a whole assumed responsibility for it. It was a moral question, since the whole nation had benefitted from the victory, and a political one, because unifying the debt promoted political union. Thomas Jefferson and many others opposed Hamilton, because he did not want to cancel the debt or extend it, but, to the contrary, wanted to use it as a source of new credit. Many of his enemies were plantation owners; they did not want industrialization and they supported the slave system.
What did Hamilton do for industrialization?
For example, he created the Society for Useful Manufactures.  After the American victory in the war, British imports pushed out of the market the American industries born during the Revolution. The SUM project was conceived as a model production center, complete with a hydropower plant and infrastructure capable of sustaining various industries, which produced textiles, paper, shoes, and steel cables. These were all very important goods for economic independence, as defined in the Report on Manufactures: the nation’s capability to provide the “means of subsistence necessary to house, clothe, and defend itself.” In that report, Hamilton analyzed the utility of various industries and put an emphasis, in particular, on the production of steel (and iron-nbs).
He was a protectionist; a little like Trump today, no?
Hamilton’s protectionism was different. To promote industry and agriculture, he wanted to supply private credit for certain categories of industry; gave incentives to those who worked in innovative industries; constructed a transportation system; and financed scientific research. He did impose import tariffs, but only to prevent startup industries from being suffocated by foreign competition. Not like the U.S. punitive tariffs today, which are imposed to counter the technological growth of other countries. Today, I believe, Hamilton would say: Very well, let us protect our industries, but favor investments in technological development and supply the financial support necessary, so that they can compete in the international markets.
So, would it still be possible to have a Hamiltonian policy today?
Today, Hamilton would be the foremost opponent of Wall Street. I believe his perspective would be to complete the objectives of John F. Kennedy, the last President who established a policy based on the American System of economics. It would move in three directions: space research, nuclear energy, and a good water management system. These are all fundamental sectors today, that imply international cooperation (Kennedy promoted cooperation in many fields, even with the Soviets). I believe that he [Hamilton-nbs] would also be in favor of creating, as I propose in my book, a national bank for supporting infrastructure, founded on the principle of transforming debt into credit, as he did with the First National Bank.
- Chapter 3 of my book has a full discussion of the SUM.