“It is good to meet and drink at the fountains of wisdom inherited from the Founding Fathers of the republic,” noted President Warren G. Harding. Perhaps now more than ever the nation needs to follow Harding’s advice. Instead of tearing down statues of the Founding Fathers we should be learning from their wisdom. Alexander Hamilton is one of the Founders that can serve as a guide for our troubled nation today. Many of the issues confronting the nation today can be resolved by studying the ideas of Alexander Hamilton.
Hamilton, who served as Secretary of the Treasury under President George Washington, was instrumental in establishing the modern system of American capitalism. Hamilton, a leading member of the Federalists, was an influential adviser to President George Washington and an influence on Supreme Court Chief Justice John Marshall.
Hamilton was considered the “chief architect of the Washington administration’s policies.” Forrest McDonald, who was a leading historian of the American Founding and biographer of Hamilton, argued that “Hamilton’s fiscal system, which breathed life into the Constitution, was an example of conservatism – of constructive, prudential change – at its best.” Hamilton’s policies which consisted of paying down Revolutionary War debts, establishing the first Bank of the United States, and establishing a system of tariffs. Hamilton’s economic program placed the nation onto a path of a sound economy. His policies were later continued and advocated by the Whig Party under the leadership of Henry Clay of Kentucky and Daniel Webster of Massachusetts. Both Clay and Webster pushed the American System, which was a system of economic nationalism and reflected the Hamiltonian economic goals of economic development.
As Treasury Secretary, Hamilton also delivered a number of reports to Congress, most notably his Report on Manufactures. Hamilton, a veteran of the American Revolutionary War who helped lead the victory at the Battle of Yorktown, understood the need not only for a strong economy and financial system, but the nation could not be dependent upon foreign nations. “Hamilton’s report would become our blueprint of economic independence,” wrote Patrick J. Buchanan.
Coolidge wrote that Hamilton “desired his country to be self-sustaining and self-sufficient.” “Conservative statesman from Alexander Hamilton to Ronald Reagan sometimes supported protectionism and at other times they leaned toward lowering barriers. But they always understood that trade policy was merely a tool for building a strong and independent country with a prosperous middle class, wrote Ambassador Robert Lighthizer, who served as United States Trade Representative in President Donald Trump’s administration.
What would Hamilton think of our dependency today on foreign nations, even hostile nations such as China, for necessities? Overtime the United States has outsourced much of our manufacturing base in pursuit of free trade and globalization. The COVID-19 pandemic demonstrated that we have outsourced too much, including crucial medical and pharmaceutical supplies.
As McDonald wrote, “Hamilton rejected laissez-faire theories…., but “proposed, therefore, to use government to encourage economic change,” while “emphatic in his reliance upon voluntarism and capitalism.” Both the Federalists and the Whigs followed an economic policy that was nationalistic in nature. The Republican Party continued the political philosophy of Hamilton and the Whigs through the leadership of President Abraham Lincoln and the Gilded Age administrations, most notably, the administration of President William McKinley. Both President Warren G. Harding and President Coolidge were influenced by Hamilton’s political and economic philosophy.
“The party now in power in this country, through its present declaration of principles, through the traditions which it inherited from its predecessors, the Federalists and the Whigs, through their achievements and through its own, is representative of those policies which were adopted under the lead of Alexander Hamilton,” stated Coolidge in reflecting on Hamilton’s influence upon the Republican Party.
Andrew Mellon, who served as Secretary of the Treasury in the administrations of President Harding, Coolidge, and Herbert Hoover, was also influenced by Hamilton’s philosophy. Mellon’s distinguished service as Secretary of Treasury also earned him the compliment of being referred to as the greatest Treasury Secretary since Alexander Hamilton.
“Alexander Hamilton, whose genius was responsible for the establishment of our financial system, early committed this Government to a policy of debt payment and keeping expenditures within income,” wrote Andrew Mellon. It was these principles that drove both the Harding and Coolidge administrations. Reducing government spending, lowering tax rates, and paying down the national debt were all important policies of the 1920s, which led to substantial economic growth.
The Harding and Coolidge administrations serve as an example for policymakers in how to address issues of spending, taxation, debt, trade, and immigration. Harding and Coolidge followed a conservative Hamiltonian approach to all these issues.
Hamilton may be seen by some as a proponent of “big government,” which to a certain extent he was in compared to some of his contemporaries — most notably Thomas Jefferson, but his economic policies not only saved the young republic but created the American capitalistic system. Although Hamilton and Jefferson disagreed, Hamilton’s philosophy was not the beginning of modern liberalism or progressivism. As Michael P. Federici wrote in The Political Philosophy of Alexander Hamilton:
Hamilton was not a libertarian, but he was not an advocate of the managerial state either. His view of human nature would not have allowed either the faith in economic anarchy suggested by libertarians or the heavily regulated state advocated by Keynesians. Hamilton’s policies lack enough of the Gnostic flavor of Jacobinism or Progressivism to consider his political economy an antecedent to modern American liberalism. They were not designed or intended to eradicate poverty, fear, want, as FDR’s New Deal was designed to do, and they did not aim to dramatically change the scope of government’s role in individual lives. Hamilton’s objections were far more modest.
Federici’s argues that “Hamilton’s political economy becomes sober to the point of being incompatible with later ideologies and developments in American history, like the New Deal, the welfare state, and the managerial state.”
“Above all, Hamilton understood the powers of government to be limited—not only by the written law of the Constitution, but also by the natural rights affirmed by the consensus of the Founding generation. Hamilton favored an activist federal government, but he did so on grounds and within limits that are recognizably part of the American conservative and constitutional tradition,” wrote Carson Holloway, a Professor of Political Science at the University of Nebraska, Omaha.
Conservatives often champion Thomas Jefferson as a hero, but Hamilton provides the best example of a prudent conservative statesman. Coolidge and other conservatives understood the importance of Hamilton and today’s conservatives should embrace his conservative nationalism.
President Coolidge was correct when he wrote “when America ceases to remember his greatness, America will no longer be great.”
By: John Hendrickson
John Hendrickson serves as policy director for Tax Education Foundation of Iowa