After the announcement on Wednesday about the Treasury Department’s decision to replace Alexander Hamilton with a woman as the face of the $10 bill, while leaving Andrew Jackson on the $20, I thought it would be appropriate to briefly compare these men’s respective legacies in terms of the financial system.
As the first Secretary of Treasury, Hamilton was the architect of creating a national financial system and establishing the constitutionality of a national bank. Hamilton faced an uphill battle, with ardent opposition from Jefferson and Madison, and a lukewarm reaction from President Washington. However, he cajoled, persuaded, and politicked in order to birth the new financial system.
Elizabeth Hamilton described Hamilton’s commitment to the Bank in a quote to a journalist years after Hamilton’s death, as quoted by Michael Newton:
“He made your Government! He made your Bank. I sat up all night with him to help him do it. Jefferson thought we ought not to have a Bank, and President Washington thought so. But my husband said, ‘We must have a Bank.’ I sat up all night, copied out his writing, and the next morning he carried it to President Washington, and we had a Bank.
Hamilton believed that a national bank would help establish public credit and place the new nation on the solid footing that would be necessary to secure its future.
In a 1781 letter to Robert Morris, Hamilton wrote:
The tendency of a national bank is to increase public and private credit. The former gives power to the state for the protection of its rights and interests, and the latter facilitates and extends the operations of commerce among individuals. Industry is increased, commodities are multiplied, agriculture and manufactures flourish, and herein consist the true wealth and prosperity of a state.
He clung to this opinion despite significant opposition, and established the federal debt and the national bank through sheer force of will. The financial system that Hamilton set up during his tenure as Secretary of Treasury outlasted him and left a legacy that shaped institutions for years to come.
As Albert Gallatin, Jefferson’s Secretary of Treasury noted in a letter to Hamilton’s son:
“I have found the most perfect system ever formed. Any change that should be made in it would injure it. Hamilton made no blunders, committed no frauds. He did nothing wrong.”
In contrast, Jackson despised the idea of a central bank, and believed the very existence of a National Bank was contrary to his narrow interpretation of constitutional powers. Jackson relished the idea of being able to destroy the bank by vetoing its charter, and engaged in the famous “Bank Wars,” taking on Henry Clay and Nicholas Biddle (then-president of the National Bank)
In November 1829, Jackson wrote to Nicholas Biddle:
“I find it right to be perfectly frank with you. I do not think that the power of Congress extends to charter a bank out of the ten-mile square. I do not dislike your bank any more than all banks. But ever since I read the history of the “South Sea Bubble” I have been afraid of banks.”
In his Bank Veto Message of 1832, Jackson stated:
The present corporate body, denominated the president, directors, and company of the Bank of the United States, will have existed at the time this act is intended to take effect twenty years. It enjoys an exclusive privilege of banking under the authority of the General Government, a monopoly of its favor and support, and, as a necessary consequence, almost a monopoly of the foreign and domestic exchange. The powers, privileges, and favors bestowed upon it in the original charter, by increasing the value of the stock far above its par value, operated as a gratuity of many millions to the stockholders….
This pro-Jackson cartoon about Jackson’s destruction of the central bank is actually entitled “the Downfall of Mother Bank.”
In light of Hamilton and Jackson’s respective impact and beliefs on the financial system, replacing Hamilton while leaving Jackson on currency is highly problematic. Removing the spiritual father of the Treasury Department while continuing to allow one of its sworn enemies to retain a place of honor shows a blatant disregard for history.