Tag Archives: Alexander Hamilton

Vitality and Human Capital

munchjohan

“Evening in Karl Johan Street,” Edvard Munch, 1892

It is sometimes said that money is a form of energy, but it may be more appropriate to suggest that money is a symbol of vitality, or life energy.  In theory, this is the “means of production” that Karl Marx said defines capitalism.

“Capitalism” has become a sinister term in some circles, but I wonder if the term has been commandeered not by the individuals who provide the vital force that keeps “the economy” functional, but by the aggregators of human capital under institutional umbrellas.

Some claim Adam Smith, who wrote The Wealth of Nations in 1776, is the “father of modern capitalism,” but Smith never mentions the word “capitalism” in his book.  He refers a lot to “capital” and to “stocks,” without defining either term.  For a lay reader, The Wealth of Nations is tedious reading, and it comes across as a tax collector’s bible.  Smith states up front that “the late war,” which he never pinpoints, but is probably the Seven-Years War (the French and Indian War in North America) was exceedingly expensive, and the UK went into a lot of debt to pay for it.  The Wealth of Nations, which supposedly supported “free trade” also supported military protection of UK commercial interests in foreign ports and foreign trade, because it was easier to tax.  “The colonies” were great sources of raw materials, and because Britain had a monopoly on trade with its colonies, it and British investors could buy tobacco and lumber, for instance, and sell at a huge profit.  Smith tells us that growing tobacco in France was illegal, because it was too hard to tax domestic products.

Another striking feature of Smith’s book was that it was so cold-blooded regarding the value of labor.  Labor should be paid enough to raise four children, because statistically, two die before reaching majority, and the parents need to replace themselves. Rents should be as high as the tenant can afford.  Farmers are lazy because they do a variety of different things, whereas factory workers do the same thing all day and are more efficient.  He refers to the “idle” without defining them, but when he says the “idle” will spend gold to buy exotic birds and fish from remote lands, where bank-issued currency is not accepted, it becomes clear that the “idle” are rich rather than poor, and possibly associated with the court and the aristocracy.   He also noted government jobs are greatly coveted, because of the security and “perks” they provide.

It is therefore not surprising that Smith’s book was so popular that its author was appointed Customs Commissioner of Edinburgh after it was published.

When Karl Marx defined “capitalism,” as the “ownership” of the “means of production,” he didn’t specify what the “means of production” was.  It was assumed to be the machines or the land from which salable items were produced.  But nothing is produced without human effort, which leads to the idea that the “means” is the human labor itself.   “Ownership” thereof is either explicit, as in slavery, or implied, as in employment by the aggregator of human capital under a larger umbrella.

The intrinsic value of human capital has never been fully appreciated.  Both Ayn Rand and Milton Friedman mentioned human capital, but neither took the idea far enough to assert that only individuals can be “capitalists” in the purest sense of the word.  Human beings, by their individual efforts provide the means, through the application of their vitality, to produce commercial goods.  This is what translates into money, the tangible result of the applied effort.

This may sound like a petty point, but it has far-reaching ramifications.  In the United States, it is said that all taxes ultimately fall on the individual.  This means that the individual in this country is supporting taxes imposed by federal, state, county, and sometimes city governments, and is expected to obey laws enacted by all four levels of government.

The system is a hierarchical, patriarchal one of “government over the people” that was set up intentionally by an elite group of landowners, lawyers, businessmen, bankers, and other conspirators who met in secret, locked in a room in Philadelphia for three months, drafted the US Constitution, and by-passed state legislatures to have it ratified by special assemblies.  Thomas Jefferson and John Adams, who are considered among the “founding fathers,” were both out of the country at the time.  Thomas Jefferson was appointed Secretary of State and approved by the Senate without his knowledge or consent.

Alexander Hamilton, who was an ideological protégé of Adam Smith and a British subject, was New York’s only standing delegate to what became known as the Constitutional Convention.  Suffice to say that he had a heavy hand in the drafting, forming strong alliances with George Washington and James Madison, and was probably instrumental in insuring certain provisions, including federal control of all “economic narrows,” such as roads, waterways, the postal service, coastlines, money, patents and copyrights.  Ultimately, the Constitution is an economic document that assumes all taxpayers are federal government property.  Undoubtedly, Hamilton made sure the federal government could assume debt, because as Treasury Secretary later, he pushed through the first tariff, the Hamilton Tariff Act of 1789, and the whiskey tax in 1791.  The whiskey tax was in advance of his creating the first US central bank.  Stock shares in this bank and the Bank of New York, which Hamilton had previously started, were among the first stocks traded in what would become the New York Stock Exchange.

So all the hype US citizens and taxpayers have been sold all these years about “freedom” and “democracy,” and “capitalism” and all the noble values people assume the “founders” intended, are the result of masterful marketing, a talent now well developed by New York’s Madison Avenue.  The bottom line is the US is and always has been an economic machine in the tradition of British imperialism.

So this “government-over-the-people” mentality has been carefully cultivated over the US’ 245 year history, based on this implicit notion that everyone must work to support “the economy,” which is an amalgamation of the federal bureaucracy in Washington DC, Wall Street, the bankers—and of course the military– but it is a perverse, upside down system that is now collapsing from its own weight.

The undervalued human capital that has been conscripted and seduced into this arrangement is catching on, resentful and angry at the betrayal of those whose version of “protection” translates into higher and more painful costs and increasing restriction of individual freedom.  The hoi polloi are not “rising up,” as the revolutionaries might wish.  Instead, they are “beaten down,” giving up, flunking out, doing drugs, both legal and illegal, going bankrupt, committing suicide in shockingly increasing rates, getting sick and tired of the stresses and strains in living in such a “wealthy” society.

While the nation and world are increasingly “de-vitalized” by the expectations and hoops that the “ruling class” have set for them, the human capital that churns the wheel is getting crushed under it.

The idea of  “capitalism” has been twisted and perverted into its opposite by those who would enslave the “human capital,” the vital life forces that provide not only the “means” of production but are also the purchasers of the goods produced.

The healthiest and most vital people may or may not have money, but they excel at self-determination because they only answer to the wealth between their ears.   These are the “capitalists” we can respect and emulate.

 

 

New York, New York

The June, 2018 issue of Mindful magazine was dedicated to optimism.  One of the articles relates the story of a woman whose cleaning service worker cut his finger on a broken coaster.  Her husband suggested she give the man some money, but said husband protested when the writer went further and called the service the next day to inquire about the man’s cut finger.  Apparently the cut was minor and a band-aid stopped the bleeding.

The husband worried that admitting error could bring legal charges, but our author claimed she was “optimistic” that the situation would resolve itself.

“Huh?” I wondered, after reading the article.  “These people must live in New York.”  The magazine is also based in New York.  How many regular Americans have cleaning services, I wondered.  Moreover, even if they have maids or help to clean their homes, how many Americans would worry about lawsuits from flesh wounds on index fingers?

This got me to thinking about how solipsistic New York is.  In many ways, New York dominates the world.  It is the publishing center, financial center, media center, entertainment center, and the advertising center of the world.  I lived there for two years in the mid-1970s, and there’s a lot to like about it, like the public transportation system.  But after two years, the noise, the dirt, the congestion, and the crowds got to me, so I escaped to the mountains of Colorado and re-captured my sense of balance.

Lately, though, I’ve become increasingly aware that New York provincialism has a far deeper impact than most people realize, and it’s not healthy.  These people don’t know where their food comes from or where their garbage goes.  They actually believe the propaganda they put out for the rest of the world to buy, consume, digest, and excrete.

It takes a lot of farm to feed a city, but the New York Whines and Gall Street Journal sneer at the rural rednecks who support New Yorker Donald Trump.  The New York Times, especially, seems almost deranged in its attempts to discredit the president and everything he touches, including those idiot evangelicals who are willing to overlook his licentious past and foul mouth.

While I also have issues with the president, my issues with New York itself are of longer duration and go far deeper.  New York has played a pivotal role in American history due, in part, to the machinations of the current Broadway hit Hamilton’s protagonist.  The darling of George Washington and of New York, Alexander Hamilton single-handedly did more to set the course of this nation than anyone else, except, perhaps, Benjamin Franklin.

Hamilton was admittedly an Anglophile who hailed from the West Indies, a poor, illegitimate orphan who worked in his teen years for British mercantilist traders, including slave trading.  His trip to the North American continent was financed and subsidized by his employers, who paid for his upkeep in barrels of slave-produced sugar.  He attached himself to George Washington, but was a war agitator and enthusiast even before he left St. Croix.  The only military command he ever held, after badgering Washington for years, was at the battle of Yorktown, in which he demonstrated extraordinary bravery, if his apologist/biographer, author Ron Chernow is to be believed.

Never mind that New York caved to the British three months after the Declaration of Independence was signed, on September 15, 1776, then remained in British hands for the next five years.  Never mind that at the secret Constitutional Convention—which was held on false pretenses—he drove off New York’s other two representatives, then heavily influenced proceedings, ultimately going to enormous effort to get the Constitution ratified.

Hamilton planted the seeds for the thriving blood-sucking plant New York has become, so naturally he would be a hero in the Empire State.

It was Hamilton who linked government, the banking industry, and Wall Street in the enduring marriage so-called “capitalism” has become.  After caving to the British, and maintaining an active trade with the Brits during the Revolutionary War, in 1787, the city threatened to secede from the state if it didn’t ratify the Constitution of the newly formed federal government.  As it turned out, New York and Virginia were among the last to ratify, thanks, in part to Hamilton’s barrage of anonymous newspaper articles collectively known as “The Federalist Papers.”  Then New York City became the nation’s first capitol.

It was Hamilton who pushed the first central bank through Congress, and as the first Treasury Secretary, provided loans via the Bank of New York (which he started) to pay George Washington’s and Congress’ salaries.  The first central bank, the First Bank of the United States, was 20% government and 80% privately owned, with most of the investors being foreigners.  Members of Congress also bought shares.  These two banks’ stocks were the among the first shares traded on the budding New York Stock Exchange and led to the first financial panic in US history, the Panic of 1792, thanks to wild debt-backed stock speculation by Hamilton’s erstwhile friend and Assistant Treasury Secretary, William Duer.

Now we have a case in which the government, banks, and stock market are so inter-dependent that the lines blur.  Tax-deferred pension plans, largely public pension plans, IRAs, and 401(k)s are all invested on Wall Street, providing a major source of funding for fund managers, stock churners, and profiteers to gamble their way to riches on other people’s money.

New York City and Donald Trump deserve each other.  Trump’s attitude is New York’s attitude, and it’s a gamble whether the nation will survive.

 

 

How Did It Happen?

Does anyone ever wonder how we got the income tax?  This tax has become so universal, on international, federal, state and even local levels, that it is taken for granted, but few people seem to question its legitimacy, history, or even its purpose.

An internet search suggests a form of “wealth tax” or income tax existed in the Roman Republic, ancient Egypt, and China, but the form we know, usually imposed to finance wars, began in England in 1188, by Henry II, for the “Saladin tithe” to fund the Third Crusade.

In his landmark book, Wealth of Nations, in 1776, Adam Smith, a Scott, suggested even the King of Britain could not get away with an income tax.  Tax on interest or money is difficult to calculate without extraordinary “inquisition” into every man’s private circumstances and “would be a source of such continual and endless vexation as no people could support.”  However, a mere nine years after Smith died in 1790, British Prime Minister William Pitt the Younger formally implemented the income tax, designed to pay for the French Revolutionary War, to purchase weapons and equipment.  It was a progressive income tax and in place between 1799 and 1816, but for a short reprieve following the Peace of Amiens in 1803.  It was reintroduced in Great Britain in 1842 by Prime Minister Sir Robert Peel, who was seeking revenues for the government’s increasing budget deficits.

“A heavy progressive or graduated income tax” is the second major tenet of the The Communist Manifesto, as delineated by Karl Marx and Friedrich Engels in 1848.  The fifth tenet advocates “Centralization of credit in the hands of the State by means of a national bank with State capital and an exclusive monopoly.”

In the United States, President Abraham Lincoln instituted the first US income tax in 1861 to pay debts from his war.  It was repealed by Congress in 1872.

The Socialist Labor Party pushed for an income tax in 1887.  The Populist Party demanded it in its 1892 platform, and the Democrats, led by William Jennings Bryan, advocated for the progressive income tax law passed in 1894.   Called the William-Gorman Tariff Act (Revenue Act), it reduced tariffs and imposed a two percent income tax but only on the top ten percent of earners.  In 1895, in Pollock v. Farmers Loan and Trust Co., the Supreme Court declared the tax unconstitutional, based on the constitutional requirements that taxation be apportioned by a state’s population.

Republican Rhode Island Senator Nelson W. Aldrich, who served between 1881 and 1911, was probably the single most influential individual in creating the financial structure we know today.  As chairman of the Senate Finance Committee–which oversaw bank regulation and monetary policy–he was possibly the most powerful man in the nation from 1898 to 1911. The financial Panic of 1907, (which some believe was engineered by banker and Aldrich friend/business associate, J. Pierpont Morgan) led to the Aldrich-Vreeland Act in 1908, which was designed to make the monetary supply more elastic.  It also established the National Monetary Commission with Aldrich becoming chairman.  As chairman, he led a team of “experts” to European capitals to study their banking practices, and returned as a proponent of a national banking system.  He worked in secret with powerful bankers to develop the “Aldrich Plan,” which eventually formed the basis of the Federal Reserve Act of 1913.  The secret dealings that began in 1910 and led to the creation of the Federal Reserve system is well documented in The Creature from Jekyll Island:  A Second Look at the Federal Reserve, by G. Edward Griffin.

Aldrich, who apparently had a habit of publicly opposing things he wanted, then voted in Congress for the corporate income tax in 1909, claiming this was to insure the personal income tax would not be passed.  Ten years before, he had called the income tax “communistic.”  However, later he and President William J. Taft then agreed that a constitutional amendment would be more effective in overriding the Supreme Court’s objections the 1894 law.  Aldrich claimed he believed the 16th amendment would never be approved.

The relationship between the Federal Reserve System and the new income stream generated by the income tax is not well documented, but it resembles that of the Whiskey Tax and the nation’s first central bank in 1791.  At that time, Treasury Secretary Alexander Hamilton introduced legislation for the whiskey tax on December 13, 1790 and for the central bank the next day, on December 14, 1790.

A common thread in the two bank/taxing schemes was that they gave the federal government the authority, if not the right, to investigate every taxpayer’s personal property and bank accounts searching for infractions, and to seize property it decides has been obtained illegally.  This has set the precedent for the federal invasion into private lives that has become so prevalent today.

In the “Gilded Age,” Nelson Aldrich was well known for his close and unsavory ties to business, by which he had become personally wealthy.  He believed his power base would successfully defeat the income tax amendment.  Indeed, while they were opposed, their solidarity had broken down, so individuals like Andrew Carnegie and John D. Rockefeller (whose son John Jr., married Aldrich’s daughter Abby) formed tax-exempt foundations to shelter their wealth before the tax went into effect.

At that time the income tax was promoted as a “class tax,” with only the upper income earners affected, so the idea of wealth re-distribution appealed to lower income earners.  Only later did President Franklin D. Roosevelt expand the “class tax” to a “mass tax,” according to former IRS historian Shelley L. Davis in her book, Unbridled Power: Inside the Secret Culture of the IRS.

Proponents of the income tax used other arguments, too.  It was proposed as a more reliable method than tariffs for raising federal revenues, and gave President Woodrow Wilson justification for reducing tariffs.  Also at that time the idea of Prohibition was in the air, and advocates of Prohibition recognized the government would lose income from excise taxes on alcohol.

The 16th Amendment reads, “The Congress shall have the power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.”  It was passed by Congress on July 2, 1909 and sent to the states for ratification.

It was supposedly ratified by the requisite number of states by February 13, 1913.  However, there is some question about whether it was ever properly ratified.  In 1985, William J. Benson published The Law that Never Was about the income tax.  Here, Benson claimed that in 1984 he had visited national archives and all 48 state capitals looking for records of ratification.  Not only had he found variations in wording and punctuation from the congressionally approved amendment, but he claimed some states which were certified as ratifying never did or voted against the amendment.  He said only two to four states had ratified as written.

Constitutional amendments require ratification by three-fourths of states.  In 1913, there were 48 states, so 36 would have had to ratify.  Benson found that seven states had not ratified at all.  1913 Secretary of State Philander Knox had claimed Kentucky and Tennessee ratified, but Benson said they did not.  Eight states were reported as having ratified, but Benson found no evidence of it.  Six more states did approve, but the governors or other officials required to sign did not sign.  Twenty-five states violated provisions of their own constitutions in ratification, and 29 violated state procedures.  Twenty-two states changed the wording to ratify, one state changed spelling, and 26 states changed punctuation.   Oklahoma changed the wording to say the opposite of what the amendment said.  Tennessee law required a delay until the next session but ignored it.

The American Law Division of Congress’ Congressional Research Service responded in May, 1985 to Benson’s claims.  “While it didn’t rebut Benson’s factual claims,” it said the amendment had been ratified “because Knox said it had been ratified,” says one internet source.

In 1990 Benson went to prison for tax evasion.  He served 15 months before a federal appeals panel overturned the conviction, saying a government witness had given improper testimony in the 1987 trial.  This occurred less than one month before Benson was scheduled for parole.

Benson’s book caused quite a stir, and he was selling packages based on his book to help individuals fight the Internal Revenue Service.  However, those who have used his arguments have not fared well in court.  Also, Benson himself was the loser in court rulings in 2007 and 2009 that determined his “Reliance Defense Package,” which he sold for $3500 to tax protesters, was fraudulent.

Courts have denied requests for evidentiary hearings and have refused to hear the arguments against the 16th amendment itself, claiming “Secretary Knox’ decision is now beyond review.”

In an interview in 2013, Benson remained an income-tax evader and bragged he has never gone back to prison, despite his continued outspoken crusade against the 16th amendment.

 

 

 

Hamilton’s Legacy

As the rich get richer and the poor get poorer, pundits and philosophers theorize about the problems of income inequality, social stratification, and legal injustice.  Proposed solutions flow thick and fast, most advocating government intervention or denouncing government de-regulation since the Great Depression.

The American myth of freedom, democracy, and capitalism dies hard, but the United States has never been free, democratic, or even capitalistic, unless it was before the Europeans arrived.  Stratification of society was built into the system with the arrival of the English and their traditions of monarchs and minions, the French and Spanish, and their long histories of battle and inbreeding among themselves on the European continent.

The American experiment may have represented a break from the past, but it carried with it the same patriarchal patterns of its forebears.  The “Founding Fathers” ultimately adopted a government structure that varied only slightly from that of its British progenitors.

Many US citizens don’t know the difference between the Declaration of Independence, which we celebrate on July 4 every year, and the Constitution, which was drafted in secrecy and signed on September 17, 1787, over eleven years after the Declaration announced the United States’ independence from Britain.

In that eleven year gap, the Revolutionary War had been fought and won.  The now free colonies were struggling with debts to soldiers, domestic, and foreign investors.  The individual states had taxing power, but the loosely formed union did not.  Some states were paying off their debts, but others were lagging.  John Adams had been sent to London to negotiate credit for the fledgling country, and Thomas Jefferson had been sent to France for the same purpose, to replace Benjamin Franklin, who was aging and ill.

James Madison of Virginia and Alexander Hamilton of New York led the effort to revise the Articles of Confederation with a new Constitution that would create a strong central government, supersede state governments, and have the taxing power to pay war debts.  Once gathered at what became the Constitutional Convention in Philadelphia, though, each delegate learned the intent was to completely re-write the Articles and was sworn to strict secrecy. George Washington was unanimously elected president.  Madison sat by his side taking notes and was later acknowledged as having written the Constitution.  Alexander Hamilton was a strong advocate for a centralized government, brilliant and opinionated, an open admirer of the British model, including the monarchy, and wanted to reproduce the British system in the states.  He also extolled wealth and privilege, claiming the masses could not be trusted to manage their own affairs.  Madison was of the same general opinion.

While he initially opposed the Constitution, Hamilton later became its strongest advocate and promoter.  He induced Madison and John Jay to write with him what became the Federalist Papers, a series of anonymous essays distributed to newspapers to promote ratification by the states.  For ratification, the Philadelphia conventioneers chose to bypass state legislatures and rely on specifically convened  ratification conventions.

Hamilton played an early and profound role in shaping the early American government.  According to his biographer, Ron Chernow*, he was an illegitimate child of a dissolute couple, born in 1755 or 1757 on the British island of Nevis in the West Indies.  After his father abandoned the family and his mother died, he was employed at age 13 as a clerk and bookkeeper for wealthy British traders on St. Croix, also in the West Indies.  His employers traded in a variety of goods, but at least one shipment a year was of African slaves.  Those employers eventually financed Hamilton’s migration to the New York colony in 1773, where periodic shipments of slave-produced sugar covered his expenses.

Hamilton, who was dashing and gifted, quickly made his way into New York society, courting and marrying a daughter, Elizabeth, of the prominent Philip Schuyler.  He enlisted in George Washington’s Continental Army, gained Washington’s confidence and became his personal secretary during the Revolutionary War years.  Later, Washington granted him his one and only command, at the battle of Yorktown, where Continental and French forces defeated British General Cornwallis to win the Revolutionary War.

After the war ended, Hamilton practiced law in New York City and involved himself in politics.    He also involved himself in banking, writing the constitution for the Bank of New York in 1784, as agent for his brother-in-law, John B. Church, who was in Britain acting as a member of Parliament.  It was New York’s first bank and exists today as BNY-Mellon, billed as having the longest continually traded stock on the New York Stock Exchange.

After the Constitution was ratified, George Washington became the first US president, elected in 1788.  John Adams was elected vice president, and Hamilton became Washington’s first Treasury Secretary.  Thomas Jefferson, who was still in France, was appointed Secretary of State and confirmed by the Senate before he knew of his appointment.

Hamilton went to work immediately to take control of the nation’s finances.  The day after his confirmation as Secretary of the Treasury, he arranged for a $50,000 loan from the Bank of New York—of which he was a director–to pay salaries of Washington and Congress.  He then arranged for another $50,000 loan from the Bank of North America.  The Hamilton Tariff Act of 1789 was Congress’ second official move, after establishing rules for taking oaths of office.

By 1790, Hamilton was busy working on a plan for the federal government to assume state debts from the Revolutionary War.  In the Constitutional Convention the question of assumption had split—like the slavery issue—essentially along North-South lines, because Southern states had paid off much of their debt, while northern states, like New York, had not.  The issue dovetailed with questions about the ultimate location of the nation’s capital.  Madison, silently backed by George Washington, negotiated for a Potomac River location near Washington’s Mount Vernon plantation in exchange for agreeing that the federal government would assume the states’ debt.

Meanwhile, Hamilton was busy creating the First Bank of the United States, a central bank that could issue credit, capitalized at $10 million, 20% owned by the government and 80% owned by shareholders.  He was also looking for other sources of income and convinced Washington and Congress to support an excise tax on whiskey.  He introduced legislation for the whiskey tax on December 13, 1790 and for the central bank December 14, 1790.  At that point, Washington’s main source of income came from whiskey distillation.

Both James Madison and Thomas Jefferson vigorously opposed the central bank, calling it unconstitutional.  Madison and Hamilton had been allies before, but this difference in interpretation of the Constitution caused a rift that never healed.  Jefferson and Madison wrote letters back and forth condemning the mad stock speculation that greeted the public offering of central bank stock, and the fact that people in the Northeast could talk of nothing else.  Once again, critics claimed Hamilton demonstrated a preference for rich Northerners, as he only offered the stock through three banks, in Boston, New York, and Philadelphia.  Also, opponents pointed to the fact that three-fourths of investors were foreign.  Thirty of the approximately 85 Congressmen bought shares.

Hamilton’s assistant Treasury Secretary, William Duer, could be called one of the nation’s first inside traders.  Philip Schuyler, who would become Hamilton’s father-in-law, had previously done business with Duer and had encouraged him to move from Antigua to New York.  Duer became an early friend when Hamilton immigrated to the continent.  But Duer turned out to be an inveterate gambler and stock speculator who was blamed for causing the Panic of 1892 through debt-backed stock speculation in First Bank of the United States stock. His method was to borrow heavily to make trades, hoping to sell at peak prices, but he ran out of cash and couldn’t make payments on his debts.  People panicked and started selling stock.  Hamilton then used the Treasury’s sinking fund to buy government securities anonymously, to stem the panic.

As a result of the crisis, to restore confidence, and to encourage people to start investing again, 24 stock brokers and merchants formed the New York Stock Exchange in May, 1792, by signing the so-called “Buttonwood Agreement,” under a buttonwood tree on Wall Street.  The signers agreed to trade only with each other, and to charge one-quarter percent commission on trades.  Available stock was limited to insurance companies, the Bank of New York, the First Bank of the United States, and Hamilton Bonds that Hamilton had decided to issue to pay Revolutionary War debt.

The United States has operated as a triumvirate of government, banking, and the stock market ever since.  The “Framers” of the Constitution were wealthy businessmen, planters, bankers, lawyers, and merchants, who designed a structure for exerting control over the population through laws and taxation.  While the Declaration of Independence set the states free, the Constitution bound them in economic slavery to a new taxing authority.  The links to the banking system and the New York Stock Exchange initiated the “public-private partnerships” that define the United States today.

If, in the 21st century the rich are getting richer and the poor getting poorer, it’s probably fair to say it was designed that way.  The Framers knew what they were doing.

 

*  The recent Broadway hit Hamilton is based on Chernow’s book, Alexander Hamilton, 2004.