Saturday, March 07, 2009

Review of Hamilton's Curse by Thomas J. DiLorenzo

The subtitle of Hamilton's Curse by Thomas J. DiLorenzo (TJD) is ominous: "How Jefferson's Archenemy Betrayed the American Revolution -- and What It Means for Americans Today." According to TJD, Hamilton wanted a big, powerful government and a massive perpetual national debt and Jefferson wanted a small, limited one that would quickly eradicate the debt it took on during the Revolution. Jefferson was a free trader too, and knew that laissez-faire policies were "the surest route to peace and prosperity" (3). Hamilton, by contrast, believed "that government is best which governs most" (3). Unfortunately, from TJD's hyper-libertarian point of view, Hamilton won so today we live in Hamilton's world while we pay lip service to Jefferson.

I'm sorry, but this is a load of baloney. TJD would know that if he had bothered to read any of my work, including Hamilton Unbound, The First Wall Street, Financial Founding Fathers, or One Nation Under Debt, all available at Amazon. Instead, he bashes Chernow's well-written but economically un-astute recent biography of Hamilton, my review of which can be read here. TJD dismisses the claims of Hamilton scholars (but, tellingly, not me or Richard Sylla) that Hamilton created U.S. capitalism as "absurd" without actually rebutting them (5). And instead of trying to understand what Hamilton was trying to accomplish, he leans on the hoary caricatures of Hamilton as a protectionist (high tariff) and interventionist that have led in recent years to the lamentable use of Hamilton's name by the Brookings Institution (a leading liberal think tank), William Kristol (neocon editor), and Pat Buchanan (a so-called paleocon)!

Far from being "the champion of the Leviathan State" (9), Hamilton was a libertarian mugged by reality. He learned from hard experience that a limp-wristed state was just as big a threat to liberty as an autocracy. He therefore sought to create a vigorous government that could protect life, liberty, and property. But that is where he drew the line, and that is the right place to draw it. He wanted privately owned and operated banks, insurers, factories, even roads and bridges. He did not espouse the creation of a social safety net, income taxes, or free floating government fiat paper money.

As I argue in One Nation Under Debt, Hamilton wanted a government that was big only compared to what Jefferson wanted. Compared to today's behemoth, he wanted a tiny government, Jefferson a teensy one. Both would be with Ron Paul today. This is why TJD has to claim that it took "the relentless efforts of generations of his political heirs to install Hamiltonianism for good in this country" (7). Hamilton, by this definition, was no Hamiltonian! Again, TJD confuses what Hamilton really wanted with the use that others later made of his name. If TJD would have taken the time to read the original sources, or at least the relevant secondary literature (see above), he would have seen this and found a more appropriate scapegoat for his well justified abhorrence of the status quo.

In order to scapegoat Hamilton, TJD distorts the historical record severely. He calls this poor orphaned bastard (literally meant) from the West Indies "an aristocratic New Yorker," denies solid evidence of his abolitionist sentiments, and tosses around character aspersions like hand grenades. Worst of all, in my view, TJD grossly misunderstands Hamilton's view of the national debt. Hamilton did not champion "the creation of a large national debt" (p. 40), a large national debt was thrust upon him as Treasury Secretary. Where he differed with Jefferson was in how quickly to pay it off. Jefferson wanted to do so very quickly, even if it damaged the economy with high taxes. Hamilton wanted to do so over several decades, to keep taxes at more reasonable levels, to help jump start the modernization of the financial system, and to keep the young nation united. TJD, like many writers, completely misses the amortization feature that Hamilton built into government bonds and the fact that he gave public creditors a significant "haircut" or interest rate reduction by paying only part of the sum owed in 6 percent bonds and the rest in 3 percent bonds and zeros that converted into 6 percent bonds a decade later!

In short, this book is more diatribe than history, more fiction than fact. Our government is too big, waaaaaay too big, and our current national debt is getting out of control. But it isn't Hamilton's fault any more than Jefferson's.


Hercules Mulligan said...

This is a good review.

I too, and writing a critique of DiLorenzo's position on my blog, Alexander Hamilton Patriot. I've studied Hamilton for over 4 years now.

If I have your permission, I would like to re-post some of your review on my blog. I promise to give you proper credit.

Thank you.

Robert E. Wright said...

Yes, you may. And btw I am also a patriot from upstate New York.

Hercules Mulligan said...

Wow, that's really neat to discover! And thanks for your fast response and your permission.

BTW, have you ever heard of the Alexander Hamilton Institute for the Study of Western Civilization? I think you'd be really interested in this group of like-minded Upstate NY patriots. They have an impressive membership by so many other educators and top-notch academics that it is astounding.

I thought you'd be encouraged to know that groups like this are still around. And yes, we do our best to preserve the true Hamiltonianism. ;)

Thanks again.