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Who was Alexander Hamilton? Militarism, High Finance and Checking the Democracy.
In the later days of the [indepedence] war, the high-finance types that Hamilton saw as critical to the strength and greatness of an independent America were getting worried that the domestic war debt -- multiple tiers of state and federal war bonds they'd invested in -- would never be funded with regular interest payments, and might even be wiped out completely. They weren't wrong. Ordinary people, non-bondholders, were agitating within the states for radically discounting bond payouts to face value and equalizing burdens and payoffs.

What Hamilton, Morris and others wanted to do is to assume all this debt as a federal responsibility -- centralizing the relationship of government to wealth -- and reliably fund it. People writing about Hamilton recently seem unable to face this fact, which he cogently explained: he worked hard (Madison did too!) throughout the 1780's to swell the federal debt, not reduce it. He, Washington, Madison, and Morris were nationalists, and they knew that great nationhood is possible only if it has access to a concentration of wealth. Anyway, before there was a nation, they had no power under the Articles of Confederation to directly tax people in order to fund these bonds, so they tried to get Congress to alter the Articles and pass such a tax, an impost on foreign goods. This proposed impost was only a wedge: after people got used to it, Morris said, Congress could start passing other tax laws, collecting money earmarked for bondholders' interest (tax-free, of course) from people who would never own a bond and "open the purses of the people," as Morris put it, really concentrating wealth upward [...]

But the army's officer class had not been paid what it was promised -- a fact due partly to Morris's preference for paying investors over soldiers! -- and so the nationalists saw a chance of joining military force to wealth and forcing Congress to pass the impost for funding the bondholders. What if the troops simply refused to lay down their arms unless the officers -- and crucially, to Hamilton and Morris -- the bondholders were funded?

by das monde on Sat Jun 27th, 2015 at 03:53:02 AM EST

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