The Pete Quiñones Show - Episode 1342: The Road to Civil War Pt. 2 - Hamilton's Power Tools - w/ George Bagby

Episode Date: March 12, 2026

78 MinutesSafe for WorkGeorge Bagby is a content creator and publisher of long-forgotten books. George joins Pete to continue a series detailing the long lead up to America's Civil War.George's Twitter AccountGeorge's Pinned Tweet w/ Links George's YouTube ChannelPete and Thomas777 'At the Movies'Support Pete on His WebsitePete's PatreonPete's Substack Pete's SubscribestarPete's GUMROADPete's VenmoPete's Buy Me a CoffeePete on FacebookPete on TwitterBecome a supporter of this podcast: https://www.spreaker.com/podcast/the-pete-quinones-show--6071361/support.

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It's all because of you. And, yeah, I mean, I'll never be able to thank you enough. So thank you. The Pekingona Show.com. Everything's there. I want to welcome everyone back to the Pekignano Show. George Bagby is back. And we are going to pick up where we left off the lead up to the American War between the States.

How are you doing tonight, Mr. Bagby? I'm doing well. I've been taking care of my sick children all day, but that's just part of being a dad. So I'm good. It's been a relaxing day. Oh, I would figure you'd be worn out by now. Well, it helps when they aren't throwing up all day. It's just an occasional thing. The rest of the time, they'll stay quiet. So. All right. I've been able to do a lot of reading. Oh, yeah.

That's, I've, I've been on the run all day. So I've had a chance to do a lot of listening today. That's always good, too. Yeah. All right. Where are we going to pick up today? So we're going to talk about the Washington administration today. Last time we were talking about the anti-federalist debate, and their objective.

to the Constitution, there are worries about what certain clauses in the Constitution would mean for the proposed federal government. And today we're picking up with how some of those concerns were realized only a very short time after ratification and the start of Washington's administration. So we start with the administration of Hamilton in the Treasury Department. So George Washington, when he is made the first president, he is unanimously elected. So the federalist construction, the electoral college, it meant that they did not expect there to be political parties at the federal level. They expected that political parties would remain a major element in state and local matters, but they believed that the indirect nature of the Senate and the indirect nature of the Electoral College,

where the electors were going to be chosen by the state legislatures, and there were not even any popular votes taken at that point. There was no popular referendum on presidential candidates. that this would keep political parties out of federal matters and that it would be a more enlightened kind of process. They were very optimistic in many respects, thinking that we wouldn't have political parties, factions, as Madison memorably called them, at the federal level. And that was one of their major oversights in how things ended up actually working.

But Washington is busy in his first year in the executive role setting up the executive departments. So he sets up several initial ones. He's got an attorney general, which is Edmund Randolph of Virginia. who started out as an anti-federalist and then came around by the time of the Virginia Convention. So he was actually pitching himself as a supporter of the Constitution once the Virginia Convention comes into session.

But he is early critical of the Philadelphia Constitution. We have Thomas Jefferson as Secretary of State. At this point, state is extremely small. Thomas Jefferson only has a couple of close. clerks working under him. Jefferson, incidentally, was not in the country when the constitutional debate was going on. He was in correspondence with his friend Madison, but he did not take part in the debate. Thomas Jefferson ends up kind of inheriting the concerns of the anti-federalists vis-a-vis the Constitution, even though he did not take part in that ratification controversy.

We have the establishment of the Treasury Department. So Washington calls on Congress to create these departments for him. These departments were not instituted by the Constitution itself. Congress has the power to create executive departments and Washington asked for their creation. And so they get voted into existence and funded that way. So we've got an attorney general, the chief prosecutor. We've got state, which is foreign service. We've got treasury. And we also have the Department of War with General Henry Knox of War for Independence fame heading the war department.

Those are the original cabinet offices. And then we see in Washington's inaugural address his major concern about the finances. He's inheriting a financial mess and a mandate to do something about it. We recall that the Articles of Confederation did not give Congress, the Continental Congress, any taxing power. They only financed their bills and then managed to refinance their bills a couple of times. The Dutch in particular were optimistic about American prospects and willing to refinance our debts and get a bigger cut sometime in the future because they were betting that we would work it out some way. But on the domestic level, the Continental Congress bonds had been speculated on the people,

the original holders of these bonds, be they veterans or people who had been patronized by the Continental Congress, you know, they were people supplying food to the Continental Army or other supplies got paid with bonds, with promissory notes. And as the years ground on and the Continental Congress had no means and no likely means to ever fulfill those promissory notes and actually pay off their bonds, pay off all the people that they owed money to, the bonds started trading to speculators. So the speculators would come along. And these were people with connections and obviously with capital to invest in cities, places like Philadelphia and New York. There are a lot of speculators that are buying the bonds

out of the countryside, especially in areas where the Continental Army had been campaigning, and these bonds were all over the place, they buy them for less than par. So they're buying the bonds for like $20 per $100. That's somewhere in the average of how these bonds are bought. So the bond holders and take an 80% loss to get some money out of this note. And then the speculators hold on to these notes expecting that someday there's going to be an administration with the means to pay its bills. So Washington has another major concern besides foreign debt, besides these domestic bonds issued by the Continental Congress, there is question about whether or not the new federal government will repudiate those debts. But

Washington reassures everyone. No, we are good for those debts. It's the same government. This is continuity. We want people to have confidence in our future. We're not going to repudiate our old debts. That's immoral. And Washington is also interested in the crushing military debts of the states. The states individually have war debts. This episode is brought to you by Sprecker. The platform responsible for a rapidly spreading condition known as podcast brain. Symptoms include buying microphones you don't need, explaining RSS feeds to confused relatives, and saying things like, sorry, I can't talk right now, I'm editing audio. If this sounds familiar, you're probably already a podcaster.

The good news is Spreaker makes the whole process simple. You record your show, upload it once, and Sprinker distributes it everywhere people listen, Apple Podcasts, Spotify, and about a dozen apps your cousin's swears are the next big thing. Even better, Spreaker helps you monetize your show with ads, meaning your podcast might someday pay for, well, more microphones. Start your show today at spreeker.com. Spreaker, because if you're going to talk to yourself for an hour, you might as well publish it. So, Washington then uses the taxing power, the revenue that's being raised. Congress passes a revenue tariff. and excise taxes on luxuries.

Hamilton is put in charge of managing the revenue and proposing a way to retire the debts. And Hamilton presents in 1791 a plan called the first report on the public credit. In the first report on the public credit, Hamilton proposes his scheme. to consolidate the debts. He says the federal government should assume the war debts of the states and use the revenue from the general tariff on all imports plus the excise revenue and start gradually paying that off. He proposes what's called a sinking fund.

So a certain amount of the revenue is going to go into a fund and that fund will be dedicated to paying off the debts. This is a controversial proposal. So Hamilton proposes in his first report on public credit to establish the national debt. And this is to retire the debts of the Continental Congress to establish or reestablish our credit abroad because we are a faithful debtor and we're paying our bills. And also to pay off all those who had invested in our independence, be they veterans or contractors, anyone that had invested in these debts during the war, but also to relieve the states. So this would obligate the states to the Treasury and by extension the United States government because they are all suffering under

this crushing load of these debts that they cannot pay. They're all raising taxes. Some of the States are issuing fiat currency and it's getting inflated away. And they don't have the means to satisfy these things. One South Carolina representative, he said that South Carolina has no more means to pay these debts than a boy has to kill a giant. So it was seemingly a hopeless situation for them. But the federal government has big new resources and with a combined credit worthiness of all the states together is going to get much better rates for all of these things and such. They're going to refinance it as the national debt. Now, in his first report on the public credit, Hamilton is met with a lot of opposition. It's actually voted down by Congress. And so

Hamilton is very dismayed. He believes that this is the doom of the national credit and that the states are going to be unrelieved. The trouble is that some states were able to retire their debts. Some states had access to the Western frontier. Georgia, North Carolina, Virginia, they all had Western territories and claims. So Georgia had West Georgia and parts of Alabama, and they claimed an awful lot more than that. They were able to settle their war debts by land sales out west. So Georgia had very few. They did have a lot of Indian problems. However, the Creek Confederacy and such, they were very long set with those problems. And so very few. federalist in their sympathies, not an anti-federalist stronghold at all.

Places like North Carolina, they had Tennessee. Virginia had Kentucky. They were unburdened by their war debts by land sales. And so they all object to the Hamilton, to the public credit plan of Hamilton. They say, well, what do we get out of this? we have a federal government in a distant city. They're in New York City at the time, our first capital. We believe that this new consolidated debt is going to mean a more consolidated government.

We don't think that we're going to be heard in this government. We are very skeptical of their motives and such. So what happens is Thomas Jefferson arrives in New York City about the time that Hamilton's plan fails in Congress. Thomas Jefferson finds Hamilton outside of the executive residence in New York. And Hamilton is at his wits end. He's tried everything that he can to try to get this plan through. and Jefferson invites Hamilton to dinner. And what comes out of this, this is a secret meeting.

We can only speculate what happened at this meeting, but obviously a compromise was worked out. Jefferson and Madison. Madison is in Congress as a representative from Virginia. Jefferson and Madison bring together a coalition for compromise. on the public credit. They agree to vote for Hamilton's plan on the condition that the capital is moved south.

So this is where the scheme to establish the District of Columbia comes from. Believe it or not, the District of Columbia was considered west as well as south. That it wasn't a coastal city. Obviously it's on a big estuary, the Potomac, but it wasn't considered a coastal city. It was considered an inland western city, which tells you a lot about the concentration of the population on the coastline at that time.

And it happens to be very close to Mount Vernon. So there are lots of people down south of the Mason-Dixon line that are very happy about this. They believe this is going to guarantee that the new government is going to be more. accountable to their section with its particular interests, and that it's technically located in the south, below the Mason-Dixon line. Maryland is very pleased by this. Virginia is very pleased by this. This leads to a lot of real estate speculation in both states, and Hamilton gets his first credit plan through. So Washington creates the national debt, along with these financial means to pay it off. And that is one of the major objects of the anti-federalists who are making their voices heard

in this compromise measure. They don't want to remain in debt. They want the government to be good for its bills and everything. But Hamilton is not done. In December of 71, only 11 months after the compromise, Hamilton proposes in his second report on the public credit something much more ambitious. He wants a national bank. He says that the power to incorporate a bank, a private business institution full of private shareholders and investors and granted special privileges. and that the bank will be the repository of all treasury revenues. So it's going to have one huge exclusive customer in the United States government. It's going to give this bank a huge pool of credit to loan out.

And this is conducive to Hamilton's dream of big business schemes. So Hamilton proposes this to Congress. He also has a report, a very famous report on American manufacturers, which Hamilton wants to support with policy. So Hamilton is a really extraordinary visionary leader. Hamilton proposes in his report on the manufacturers, he says, we all. know that Americans are overwhelmingly agricultural in occupation. However, there is a very promising future in industrial combinations, in business, in merchant transactions, in maritime trade. we want to take advantage of the latest knowledge about those things, especially in finance,

and we want to get ahead of that so that we become a center of manufacturing and credit. Hamilton, incidentally, is the head of the largest bank in America at that time, the Bank of New York. and the first capital of the United States is on Wall Street in New York. Federal Hall is right down there in Lower Manhattan, and that's the location of our first capital building, Washington's first capital. They've agreed to this compromise to move it southwards. They're going to move it to Philadelphia first. but even Philadelphia, the official capital for 10 years before the move to the District of Columbia.

Philadelphia is the home of America's first stock market and also a banking center next to New York. So the seat of political power is in these financial centers where people speculate and trade on shares of of organizations and all the rest. This episode is brought to you by Spreaker, the platform responsible for a rapidly spreading condition known as podcast brain. Symptoms include buying microphones you don't need, explaining RSS feeds to confused relatives,

and saying things like, sorry, I can't talk right now, I'm editing audio. If this sounds familiar, you're probably already a podcaster. The good news is Spreaker makes the whole process simple. You record your show, upload it once, and Spreaker distributes it everywhere people listen, Apple Podcasts, Spotify, and about a dozen apps your cousin swears are the next big thing. Even better, Spreaker helps you monetize your show with ads, meaning your podcast might

someday pay for, well, more microphones. Start your show today at spreeker.com. Spreaker, because if you're going to talk to yourself for an hour, you might as well publish it. And Hamilton envisions a future for the United States that involves a huge liquid supply of currency, that everyone's going to have money in their pockets, that increasing numbers of people are going to work for wages. They're going to use those wages to establish credit to finance what they need in the bustling cities. They are going to finance homes and finance investments. They're going to keep money on deposit.

and this is going to create a larger pool of credit over time. And then the United States is going to be like the great banking powers of Europe. It's going to be like the city of London. It's going to be like Amsterdam. It's going to be like Paris. And we will become one of the great creditor nations of the world. We're going to be loaning out money for all sorts of huge enterprises and speculate on the projects going on all over the world. This is Hamilton's vision. It's far from the experience of

Americans in his own day where well over 95% of Americans at that time are engaged in agriculture primarily. Even people like John Adams, who has this huge career in politics and is a professional lawyer, John Adams is still running a farm on the side. And most people can't imagine a life in this period without engagement in agriculture. And that makes them more wary of Hamilton's plans than not. Hamilton really is a visionary of the world that we live in now, a world where practically everyone works for wages. Everyone spends money for their daily needs out of their pocket. Everyone is reliant on credit to do normal things in life. Homeowners typically have a mortgage. Business owners typically have big lines of credit and business loans and things like

that, Hamilton really is the man that foresees that level of banking influence in the lives of regular people in America. It was not the experience of his own time. Nobody lived like that then. But Hamilton sees these huge financial titans moving around, these big concentrations of capital and influence throwing their weight around. the world. This is his imperial vision, if you will. And this is why Hamilton gets so many great accolades. I've got a couple of books in front of me here right now. I've got John Steele

Gordon's Empire of Wealth, the History of American Economic Power. I've got I've got Ron Chernow's Alexander Hamilton, his biography of Hamilton. The Modern writers on the subject praise Hamilton for his vision. They see all of this as part and parcel with progress itself. They see this as the inevitable development of the enlightened world, that we're going to have high finance and we're all going to be relying on credit for everything. This was far more controversial in Hamilton's Day. It wasn't that the opposition, the Republicans, as they were called then, that's Jefferson's

party, to be clear, has nothing to do with the modern Republican Party, actually has more to do with the roots of the modern-day Democratic Party. That all sounds very confusing. Don't worry about it. It's just how it ends up working out. The modern Democratic Party is like the schizophrenic child of Jefferson's Republican Party. But Alexander Hamilton is proposing the Bank of the United States. It's not that the advocates of the American states, as opposed to the federal government,

are necessarily against banking institutions as such. They are against Hamilton's construction of the Constitution. Now, some of them are frankly against. banking institutions. Thomas Jefferson, Hamilton's great rival in this measure, he said, I have ever been the enemy of banks. My zeal against those institutions was so warm and open at the establishment of the Bank of the United States that I was derided as a maniac by the tribe of bank mongers who were seeking to filch the public, their barren game. gains. Now, recall that one phrase there, the banker's barren gains. We see there the roots of Jefferson's

philosophical opposition to banks because banks make money off of loaning at interest. This is something that Jefferson, as well as great many others, including Thomas Aquinas and Aristotle, recognize as an unnatural kind of wealth getting. We'll have much more to say on that later, but suffice it to say that it is not a natural means of expanding capital. A natural means would be by bringing out the fruits of the earth and selling them, by breeding cattle or chickens or something. It's a natural process that God made that increases an investment. Thomas Jefferson is using that specific phrase as a reference to the philosophical and even theological belief in usury as, an unnatural action of wealth getting because banks make money by charging a duty, an interest, on the money that they loan out. And this is the source of a bank's income. And for that,

they were prescribed through much of Christian history and still are in other circumstances. because of that view of interest as a means of wealth getting. So all that to say, Alexander Hamilton, he proposes the Bank of the United States with the justification that the necessary and proper clause in the Constitution, that the anti-federalists were so concerned about and that it was vague. and they said all sorts of outrageous things could be done in the name of the necessary and proper clause, and Hamilton also uses the general welfare clause to justify the establishment of the Bank of the United States. He says that the Bank of the United States will make business more convenient

because of a larger pool of credit to loan out to business organizations of all sorts, and that it will also make the movement of the Treasury revenues and bills that much more easy because the Treasury will be the client of this Bank of the United States. Now, in spite of its name, it was proposed as a private institution. So this is a legal construction. a legal person created by the legislature for particular purposes. So there's a charter for the corporation like a constitution. It's made by a legislature and it will have shareholders.

The United States government would only be one of many shareholders and a minority shareholder at that. So although it's called the Bank of the United States, it is actually a private institution. rather like the Federal Reserve. And a great many writers do compare Hamilton's National Bank to the Modern Federal Reserve. There are very important differences, but nevertheless, the comparisons are made. So Hamilton says the necessary and proper clause may be interpreted as what is convenient for the Treasury. It's not necessary. It's convenient. Now, on those grounds, Thomas Jefferson, in his capacity as Secretary of State, Washington asks his cabinet secretaries for their opinions on Hamilton's proposed bank. Because you remember, Washington does have a mandate to fix the financial situation. The national debt is definitely helping here, but there are other ideas circulating as well.

So Thomas Jefferson and Edmund Randolph, by the way, they both issue opinions about the Bank of the United States. Jefferson's is the most important. After listing a bill of particulars against the proposed national bank, Jefferson says, I consider the foundation of the Constitution as laid on this ground that all powers not delegated to the United States by the Constitution, nor prohibited by it to the states, are reserved to the states or to the people. Now, that is the 10th Amendment of the Constitution. And you recall the amendments of the Constitution were the common. made for the anti-federalists to bring them over to support the Philadelphia Constitution. This episode is brought to you by Spreaker, the platform responsible for a rapidly spreading

condition known as podcast brain. Symptoms include buying microphones you don't need, explaining RSS feeds to confused relatives, and saying things like, sorry, I can't talk right now, I'm editing audio. If this sounds familiar, you're probably already a podcaster. The good news is Spreaker makes the whole process simple. You record your show, upload it once, and Spreaker distributes it everywhere people listen. Apple Podcasts, Spotify, and about a dozen apps your cousin swears are the next big thing. Even better, Spreaker helps you monetize your show with ads, meaning your podcast might someday pay for, well, more microphones. Start your show today at spreeker.com.

Sprinker, because if you're going to talk to yourself for an hour, you might as well publish it. Hamilton was against these articles, these amendments. Hamilton had a very interesting reason for it. It's not that he has a secret plan to consolidate all power and that he's power mad and Machiavellian or something. Not necessarily. We can interpret him in a more generous way than that. In spite of his proposal at the beginning of the convention in Philadelphia,

to have a president for life and basically abolish the states as political powers. He did propose that it's beyond me how anyone could have reasonably expected to get that over the states. The states almost rejected the Constitution as it was. And even with the promised Bill of Rights, they almost rejected it. So I don't know how Hamilton thought he could get away with that. perhaps he didn't know the minds of his countrymen. But the 10th Amendment is the catch-all amendment. And Jefferson quotes it here. He says, all powers not delegated are reserved to the states. And Jefferson says the power of incorporation is not in the Constitution. In fact, that very power was debated in Philadelphia and rejected by the framers of the Constitution.

He goes on to say, the incorporation of a bank and the powers assumed by this bill have not, in my opinion, been delegated to the United States by the Constitution. He then lists, goes through Hamilton's points about the establishment of the bank. He says, it's not a specifically enumerated power. and then he lists out the specifically enumerated powers. He says it is not needed to borrow money. It is not needed to regulate commerce. It is not needed to lay taxes. None of these things are necessary.

A bank is not necessary to do any of these things that the Constitution specifies as powers of the federal government. He says, if we are to interpret the Constitution as giving the federal government the power to do anything it pleases, then it's a power that is not limited at all. He says, to consider the latter phrase, not as describing the purpose of the first, but as giving a distinct and independent power to do any act they please, which might be for the good. of the Union would render all the proceeding and subsequent enumerations of power completely useless. So he's saying, why specify in the Constitution things that the government can do, things the government cannot do if the government is meant to do whatever it finds to be convenient as Hamilton proposes? He says, it would reduce the whole instrument,

to a single phrase, that of instituting a Congress with power to do whatever would be for the good of the United States, and as they would be the sole judges of the good or evil, it would be also the power to do whatever evil they please. He says, it is known that the very power now proposed as a means was rejected as an ins by the convention which formed the Constitution. The proposition was made to them to authorize Congress to open canals and amendatory one to empower them to incorporate, but the whole was rejected. And so he cites intention, that the intentions of the writers of the Constitution are well known. All of these men are still alive. Many of them are in Congress or in the administration. everyone knows what they had debated privately in Philadelphia.

This is not publicly known, but they knew what they talked about there. And Jefferson mentions it there, though he was not himself there. He knows about it through his correspondence, through James Madison primarily. And so he says it was specifically not the intention of the framers, the writers of the document, to imply such a power. He says, a bank, therefore, is not necessary and consequently not authorized by this phrase.

It has been urged that a bank will give great facility or convenience in the collection of taxes. Suppose this were true, yet the Constitution allows only the means which are necessary, not those which are merely convenient for affecting the enumerated powers.

If such a latitude of construction be allowed to this phrase as to give any non-enumerated power, it will go to everyone, for there is not one which ingenuity may not torture into a convenience in some instance or other to someone of so long a list of enumerated powers, it would swallow up all the delegated powers and reduce the whole to one power as before observed. Therefore, it was that the Constitution restrained them to the necessary means. So we see in Thomas Jefferson's opposition to the bank, the anti-federalist concerns repeated on a specific policy measure. that the necessary and proper clause and the general welfare clause are dangers to the powers reserved to the states and to the people. This is a risk to liberty in the anti-federalist construction. This is a government that defines its own powers. This is a government that judges itself, and no one,

one else is in a position to judge it. And this is a unchecked power, an unchecked centralizing power. The effect will be to concentrate wealth, which is actually precisely what Hamilton had in mind. Herbert Agar, who is a latter-day agrarian writer. He was a friend of the Nashville agrarians and also people like Hilar Belloc over in England. Very strangely, though, he is an American historian, the latter part of his life is marked with some controversy. He leaves the United States. He becomes a British subject just before.

I guess it's like somewhere after World War I, he goes over there, and then he becomes a huge booster for World War II later on. But let's not hold any of his latter controversies against him and take him as he was early in his career. He won the Pulitzer and was a major American historian, and certainly a more reactionary sort. He wrote a book called Land of the Free, which is kind of a view of early American history from an agrarian perspective, definitely a very Jeffersonian perspective. And he says of Hamilton, Hamilton worshipped bigness, power, and success. Like most men addicted to such worship, Hamilton despised the common people. He never stooped, therefore, to making full or making frail apologies.

for exploitation. Hamilton recommends exploitation. Agar says he described it to its most unholy forms and said it was exactly what a great nation needed. It was the quickest way to power and therefore it was good. Now we turn back to Hamilton's report on manufacturers. Hamilton believed that the finances of the federal government should be organized to encourage American business. And so he proposes protective tariffs to protect American manufacturers from foreign competition. This is, certainly in Jefferson's day, when the vast majority of Americans are farmers, this is a special interest. There are very few manufacturers going on in America, certainly very, very few for export.

Most of them are just for the domestic market. Hamilton proposes identifying certain businesses in which the United States could be competitive abroad and raising a duty on imports of the items that compete with those businesses. This is very different from a revenue tariff. The regular general tariff was applied to all imports, and that was for federal revenue purposes. The protective tariff is raising a special revenue for a special purpose to protect a certain industry. Now, we've talked an awful lot about this. We should qualify ourselves on this.

We're living in Hamilton's world now, and so our concerns are necessarily different. It does not mean that we are all necessarily free traders because we don't like Hamilton or because we like Jefferson Best. We don't live in their world. So their concerns are very different than ours. And Hamilton's construction has been our model since Washington. Let's also be very frank about that as well. That's the way our Constitution is read.

Jefferson loses his argument. Washington chooses Hamilton over. Jefferson. But in the report on manufacturers, Hamilton says, in addition to stimulating manufacturers for domestic consumption and also eventually for export, the protective tariff will raise special revenues. We want to use those revenues to develop our own infrastructure, to make ourselves more competitive in the future in industry. So he proposes using the revenue from the protective tariffs to build canals, to clear rivers for navigation, to invest in ports, and other measures to improve internal communications, roads, and such.

This will make American business more competitive in the long run, because we will have better internal trade networks. It will be cheaper to move things to market and also to sell them fraud. This episode is brought to you by Spreaker. The platform responsible for a rapidly spreading condition known as podcast brain. Symptoms include buying microphones you don't need, explaining RSS feeds to confused relatives, and saying things like, sorry, I can't talk right now, I'm editing audio. If this sounds familiar, you're probably already a podcaster. The good news is Spreaker makes the whole process simple. You record your show, upload it once, and Spreaker distributes it everywhere where people listen, Apple Podcasts, Spotify, and about a dozen apps your cousin's swears are the next big thing.

Even better, Spreaker helps you monetize your show with ads, meaning your podcast might someday pay for, well, more microphones. Start your show today at spreeker.com. Sprinker, because if you're going to talk to yourself for an hour, you might as well publish it. Hamilton, in his report on manufacturers, also says something else. And this is a very interesting vision into Hamilton's mind. He says, in general, women and children are rendered more useful by manufacturing establishments than they would otherwise be, just living their lives, women homemaking and such.

They are wasted beings in Hamilton's economy. He says, of the number of persons employed in cotton manufacturers of Great Britain, four sevenths are women and children. We're reminded Hamilton's model for his financial schemes, for his political vision for America, he is always looking to the success of Great Britain. And here he's looking at a successful modern industrial power. And he's saying they're employing huge numbers of children. So we should be encouraged to follow their lead. He says, the children of whom the greatest proportion are of tender age. So he's not proposing hiring teenagers for this.

He's proposing hiring very young people for this, mere children. And he says, this is going to be great because they're going to have money in their pockets. They're going to buy consumer goods. They're going to open bank accounts. They're going to expand our national pool of credit. And this is, as I said, he's more of a visionary of the modern world than a man of his times. And that's one of the reasons why he gets so much, so much tribute from. people of our own day, especially the capitalists of our own time. They see in this the germs of the

systems that they themselves enjoy. Hamilton is also an elitist, not that this is necessarily a mark against him. Hamilton wants not a government that is representative of the masses of Americans. He actually proposes a government of what he calls the rich and well-born and able, as opposed to what he calls the mass of people. And this corresponds to his own more monarchical proposal for the American government at the Philadelphia Convention. We remember he imagined an executive appointed for life. He imagined the executive appointing state governors for life and a much more centralized system, basically abolishing the states, giving the president the power to veto state legislation. This is a far more aristocratic vision for American politics.

And as I said, I don't see how anyone could have speculated on having a chance in Hamilton's day. The states certainly would not have surrendered their powers up so frankly as that. So we see the opposition coalescing against Hamilton. They are suspicious of the center of political power. They are also suspicious of centralized economic power. Now, this is Hamilton's goal from the start. we look at his first report on public credit. He wants to consolidate all of the debt and a national debt.

So there used to be a financial market, financial concerns in Boston, in Savannah, Georgia, in New Bern, North Carolina, the old capital of North Carolina, in Richmond, Virginia. They all had their own financial markets. They all had their own crushing war debts. They all had their own bunch of speculators. When Hamilton proposes the consolidation of all of those debts combined, rolled into the debts of the Continental Congress, you recall the speculators were an issue there. The anti-federalist country element floated a unworkable problem.

floated a unworkable plan to find the original investors in those bonds, the original bondholders, and pay the full amount of the bond to them. But that was unworkable for a number of reasons. There was no master list of who had ever received those bonds. Also, speculators had bought the bonds. Did they actually buy the right to be paid those bonds? Or was that not included in holding a bond? You know, it's a piece of movable property.

Don't you have a right to it if you've sold it or if you've bought it from somebody? So Hamilton dismisses that and that was unworkable. But we see with the anti-federalists, they're very concerned with the concerns of the countryside over the city investors and speculators. The Republican element, the Jeffersonian Republican element had succeeded after independence in moving the state capitals in many instances away from the coastal cities. In many instances, the capital moves far inland. And the idea there is the same idea reflected in the movement of the national capital to Washington, DC. The movement of the capitals inland from New Bern, North Carolina, to Raleigh, North Carolina, from Savannah, Georgia to Millageville, Georgia, the second capital of the state of Georgia,

from Charleston, South Carolina, to Columbia, South Carolina, from New York City, New York, to Albany, New York, and so on. This happened in many places, Not all, obviously, Massachusetts, it's a good example to the contrary. But the idea was the same in each one. They wanted to get their political class away from the merchants that predominated in the cities, the speculators, the special interests. Well, when Hamilton consolidates the national debt, and he very reasonably, I think, He reasonably says, we pay to the bond holders, not the original people issued the bonds.

If they don't have those bonds anymore, they sold them to a speculator or someone else. It's the person that holds the bond now that gets paid, not the original bond holder. We don't have any list of all these people. How could we possibly verify who owned the bonds originally? this is a completely reasonable argument. When Hamilton makes the proposal, he makes it in New York City, which is the federal capital of the time. And you know what happens in New York City?

The speculators rush out as fast as they can to buy as many of those bonds as possible below part. And it's a massive, very quick centralization of capital with the federal government paying out its debts. Now, this is just logistics and human behavior. This is not necessarily any proof of any conspiracy. There are some like Charles Beard, who I've learned a lot from, and I really really, respect. Charles Beard said that the federalist faction that organizes the Philadelphia Constitution, they were a particular moneyed interest that wanted to centralize American finance. Now,

in the case of Hamilton, that is clearly true. That describes what Hamilton wanted, and he was not at all shy about saying that. Beard nevertheless has his critics. And my favorite, another great historian that I've learned a lot from, Forrest McDonald, the great Alabama scholar. Forrest McDonald wrote a book in response to Beard's economic interpretation of the Constitution. That's Beard's great scholarship on his thesis about the Federalists. McDonald wrote a book in criticism of this, and what he did was he traced down all of the prominent

federalists and tried to classify their economic status. And in that, he is very thorough and proves his thesis that the federalists contained all manner of different interests. They were not particularly the moneyed interest or the financial titans of their time. though many of them do find themselves in that camp, for the simple reason that the federalists have come up with a way to retire the bills of the articles, the Continental Congress. And that's a responsible thing to do. And so men of financial responsibility and integrity are naturally drawn to that. So it's not proof of any conspiracy. And that's, that's McDonald's view of it. I, I, I, I,

fall in between if I may be allowed to say so. The federalists do succeed in concentrating wealth. And then we have our measurement, our slogan that we say, the purpose of a system is what it does. And I believe that the high federalists had this in mind. This is what they wanted to do. They wanted to consolidate more political power under the Philadelphia Constitution. Hamilton does not wait to do so. He tries it right away. And the financial consolidation, also this element in the report on manufacturers, that the federal government will use taxes and also spend revenues

to help special interests of business, which at this time in America, history is concentrated solely in the north and it remains concentrated in the north until well after the civil war this episode is brought to you by spreeker the platform responsible for a rapidly spreading condition known as podcast brain symptoms include buying microphones you don't need explaining rsses feeds to confused relatives and saying things like sorry i can't talk right now i'm editing audio if this sounds familiar you're probably already a podcaster The good news is Spreaker makes the whole process simple.

You record your show, upload it once, and Spreaker distributes it everywhere people listen. Apple Podcasts, Spotify, and about a dozen apps your cousin swears are the next big thing. Even better, Spreaker helps you monetize your show with ads, meaning your podcast might someday pay for, well, more microphones. Start your show today at spreeker.com. Sprinker, because if you're going to talk to yourself for an hour, you might as well publish it. That is an important thing to note and to keep in mind as we progress. The economic interests that Hamilton seeks to develop and Hamilton seeks to patronize, to sponsor with tax and spending policies, the internal improvements and the protective tariffs,

and also the big pool of credit in the Bank of the United States. Those are all particular sectional interests. Now, Hamilton goes to great lengths to say, oh, everyone is going to benefit from this. Don't be selfish and blinkered lost in your own regional constraints about economics. This is a big game. And we need to make a big splash on the world. world seen and such. We want foreign investors coming in here and buying our government bonds and so on.

We're going to have such a great credit. We're going to be able to use that credit to develop our own industries and resources. So he has this national vision. What is good for New York is good for the whole country. Why can't they see that? And Jefferson and Hamilton's opposition, the Republicans, as they're called. They are jealous for their own state's resources. They're jealous for their own state's influence. And finally, they are jealous of their own limited claims of sovereignty. That this is a federation and not a consolidated central national government. There are two levels of government in this organization. The states and the federal body they created for special purposes. And they are very jealous of Hamilton's plans to develop that central body for enriching itself,

for focusing on certain regions, to patronize certain regions, to give benefits to special interests. Now, Hamilton, in his rebuttal to Jefferson, among other things, he says, this is what governments do everywhere. And the objection of Jefferson is, it's obtuse. He's being obtuse in that he wants to limit federal power to sponsor the charge. of a corporation like this. He's provincial in his vision. He has no vision for empire and greatness. These are the things that Hamilton most treasures. Jefferson's response is that this power was specifically not delegated to the federal government.

And the federal government, it shouldn't be like Frankenstein's monster. that wakes up and dominates Frankenstein's life. The federal government should remain the servants of its creator, which is the states. It's been specifically limited by the states in their conventions with their authority. The states made the federal government. And so the states must strictly limit its powers. And that's the gist of of Hamilton's expansive vision. Hamilton is using the clauses that we had mentioned.

The anti-federalists had identified as troublesome as vague. Hamilton is interpreting them as a means to greater power. This is my amusing title for this lecture. Hamilton's power tools. These clauses interpreted in an expansive way as permissive for the federal government and its agents to interpret powers for themselves, to decide what they believe is convenient. This is an opportunity to expand the scope of the federal government so they can do all kinds of clever things with their newly found powers in this flexible instrument. Thomas Jefferson says, if the Constitution does not strictly define and limit the federal

government, which is the servant of its creator, then what good is the document? Why was it written? Why were we so specific with all of these enumerated powers? It's useless. And that in a nutshell, that's Hamilton's argument, and that's Jefferson's argument. And we see this is kind of ironic in that Jefferson and Hamilton had just brokered an agreement about the consolidation of the state debts. They had just found compromise with one another. they were working with each other.

But on this point, they were intractable. Jefferson regretted his deal with Hamilton on the consolidation of the debt, called it the worst mistake of his life that he made a deal with Hamilton. And Hamilton and Jefferson were fierce enemies of one another from the Bank of the United States forward. And of course, the result is that, George Washington faithfully accepts his protege's plan. His surrogate son, Alexander Hamilton, wins over the president with his argument for these expansive powers.

And we've had them ever since, which is one reason why, although I find Jefferson's argument entirely convincing, it's Hamilton's constitution from the start. and my sympathies are certainly with Jefferson and the Jeffersonians in history. They play a major role. And they are active up until 1865 when there's tribute, rhetorical tribute made to that tradition in subsequent generations. But notably, the Jefferson Memorial is kind of tucked away off the, the National Mall. And that's for a reason. The Democratic Party, which I mentioned was kind of the spawn of Jefferson's Republicans through curious means.

The Democratic Party would still pay tribute to Thomas Jefferson, but he's not the architect of the union that we live in. And as we see later on, Thomas Jefferson himself is not such a stickler for the strict construction of the Constitution when he himself becomes president. And we will talk about that anon. So that's my syllabus for Hamilton's power tools. I mean, this is just one of those conversations and all of the implications. if you know how to read history, you see them in every era of this country right up until now. This is not stopped. Yes.

It's always been a divide. And unfortunately, with Jefferson's failure at this, the argument goes down to the state level. So you see various states that contend with Jefferson's argument. They try outlawing the Bank of the United States, for instance. And then it goes up to the Supreme Court. And who's in the Supreme Court? Chief Justice John Marshall, who does more for Hamilton's interpretation of the Constitution than Hamilton ever did in his own career. So it took a Virginian in the Supreme Court, a Hamiltonian Virginian, John Marshall, to make that, make Hamilton's interpretation the law of the land, which happens later, and we'll talk about that later.

But the Jeffersonians, they are very like conservatives. they say, but the Constitution says the government can't do that. And the advocates of power, they say, yeah, watch us. We're going to do it anyway. It's like during COVID, right? I know what the Bill of Rights says. It says that the government can't prevent peaceable assemblies. It says that the government can't interfere with rules.

religious worship. It says that the government can't interfere with speech. Well, watch them. It's like the conservative who says, but the Fourth Amendment, right? The NSA can't listen to everything that I say without my consent. They can't collect all my information when I'm online. The CIA shouldn't be able to spy on me in my own home. And we have all this information burgundying that they're doing all of these things. Well, what about the Constitution? Well, haven't you heard of the general welfare clause? Haven't you heard that necessary means convenient? This has been the case since 1791. It's only reached these outlying departments more recently. And this is something that Hamilton says in his argument. And this is very well-worthy.

reading Hamilton's response to Jefferson's argument on the bank. He says, this is the way governments do things. The government's a sovereign power and sovereign powers judge the limits of their own power. And we are going to have some pipsqueak little American state telling us that we don't have that power. Are we really going to let some some little state like Delaware boss us around? that was the problem with the articles. Rhode Island was always vetoing all these things that were necessary and proper. So we aren't going to let them do it. Mr. President, don't let them do that to us.

Let us do these grand financial empires. And George Washington said, sounds good. As a fateful choice with unknown implications at the time. And by the way, the federal government, it stayed really small. for a long time. So we can still look at this and say, as I'm inclined to do, it was a long run of a actually very small federal government. I mean, small by our standards, it was minuscule at the turn of the century. We can scarcely imagine how small it was, and that was well after the Civil War at that point.

when the first progressives come in, you know, when you get McKinley and and Theodore Roosevelt and things start looking a little more familiar, they're dealing with such a small administration. We couldn't even imagine just how incredibly libertarian that period of time was as far as people's encounters with federal agents or inspectors. It was a vanishingly small thing. we had a very small standing army even we had very limited influence we had practically no force projection around the world until the Spanish-American war I mean I can look at that record even

with the Civil War as as the huge goal of our discussion and we're going to be talking about everything that went down with that basically put the Jeffersonian argument to bed with the result, it was still a really small government for a really long time. And that's something that I value. That is certainly a heritage of ours. Americans historically have not had big bureaucracies bossing them around and absorbing all of their resources. This episode is brought to you by Spreaker. The platform responsible for a rapidly spreading condition known as podcast brain. Symptoms include buying microphones you don't need, explaining RSS feeds to confused relatives, and saying things like, sorry, I can't talk right now, I'm

editing audio. If this sounds familiar, you're probably already a podcaster. The good news is Spreaker makes the whole process simple. You record your show, upload it once, and Spreaker distributes it everywhere people listen, Apple Podcasts, Spotify, and about a dozen apps your cousin swears are the next big thing. Even better, Spreaker helps. you monetize your show with ads, meaning your podcast might someday pay for, well, more microphones. Start your show today at spreeker.com. Sprinker, because if you're going to talk to yourself for an hour, you might as well publish it. Well, when you have people that are like each other and, you know, co-ethnicest,

co-religionists, and then, you know, you introduce people who will not assimilate. and we'll use the kind of relaxed atmosphere that a monoeuvre that a mono, ethnic monoculture provides to cheat them and to do everything they can to rule them, than, you know, what was set up in Philadelphia can be, can easily be, easily be used to justify what they want to do. That's right. And that's why Hamilton, Hamilton's a star these days. I've never seen that musical and I've made a pact with myself that I never will.

they say it saved Hamilton on the $10 bill that he was all set to be replaced or something and then the musical came out and everyone was like, no, we love Hamilton now. They didn't know their own heroes until that musical came out. Hamilton is the author

of every government expansion in American history. anything that's done for the general welfare, you have Hamilton ultimately to thank for it. He is the man who opened the doors to expansive government power in the American Constitution. And he's a visionary. He imagines the world that we live in now, where people work for wages, where nobody owns anything, where there is a huge concentration of power and wealth in the coastal elites. It's Hamilton's world. And he had incredible vision.

He set the foundations that ended up with the result that he wanted. And Herbert Agar, writing back in the 1920s. He said, in his opinion, Alexander Hamilton would be the only man of his generation that would look at Depression-era-America without shielding his eyes for pity. He said that all the other men of Hamilton's generation,

John Adams, Thomas Jefferson, George Washington, they would have all been so ashamed of the state of regular people in America. Because Agar says they actually liked regular people more than Hamilton did and cared about their faiths. You know, Thomas Jefferson famously, he envisioned an America where most people would be farmers, and so most people would be free. Most people would have property.

So most people would vote because they had a stake in their communities. That was Thomas Jefferson. vision. Maybe unrealistic that most people could wield that kind of responsibility and remain independent. But that was what Agar said about Hamilton. That Hamilton was a man that foresaw, you know, the world of Depression-era America and would have founded a good thing. Not the depression as such, but the concentration of economic power, the helplessness of the laboring people, they all have to be employed. They don't have any means of their own. That was Hamilton's vision. That was what he wrote about. That was the kind of world that he wanted to create. A world of big cities

where most people are employees, where everyone is relying on credit. That is Hamilton's vision. an America full of powerful corporations, all of them legal entities with charters from the state, many of them now with license to do business all over the world. Hamilton wanted that. He wanted concentration of credit, financial power. He wanted corporate combinations, these immortal legal institutions that can move money across the country in the blink of an eye. He wants to lower these these boundaries for the movement of money, the rapid movement of money and capital. He wants these big business combinations

creating employment, building up big cities. He wants that to be the predominant way of American life. And that's the world that he saw the genesis of. He planted the germ that that sprouted into that economy in American history so that later on we find Calvin Coolidge say, the business of America is business. And yet even in Calvin Coolidge's day, most Americans were still farmers. Most Americans remained farmers until just before World War II. Or it may have switched like right when it got started or something. It was really very late where most Americans still were engaged in agriculture. It was the 1940s. It was very recently. I mean, this stuff has changed so fast in such a short period of time. Well, until the next time,

thank you. Do plugs real quick and for people who didn't listen to episode one, and we will get out of here. Absolutely. So I run a small press. You can find me at www. tallmenbooks.com. That's M.E.N. Tallmanbooks.com. The website was just updated, and I've got a lot of new offerings there. And many more on the way. Thank you, Mr. Baggie. I'll re-publish history books. Oh, I'm sorry. Go ahead. Keep going. I republish history books. I've got a 50-volume series that's gradually coming out, a survey of American history called The Chronicles of America. I've got a high school history textbook by David Muzzy called An American History. I also have biographies of outlaws and lawmen in the Old West and also biographies of American Indians that are coming out soon. Look forward to it.

Thank you. And until the next time, take care. Thanks a lot.