Liberty vs. the Constitution: The Early Struggle

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Excerpted
from chapter 5 of Albert Jay Nock’s Jefferson.

The Constitution
looked fairly good on paper, but it was not a popular document;
people were suspicious of it, and suspicious of the enabling legislation
that was being erected upon it. There was some ground for this.
The Constitution had been laid down under unacceptable auspices;
its history had been that of a coup d’état.

It had been
drafted, in the first place, by men representing special economic
interests. Four-fifths of them were public creditors, one-third
were land speculators, and one-fifth represented interests in shipping,
manufacturing, and merchandising. Most of them were lawyers. Not
one of them represented the interest of production – Vilescit
origine tali.

In the second
place, the old Articles of Confederation, to which the states had
subscribed in good faith as a working agreement, made all due provision
for their own amendment; and now these men had ignored these provisions,
simply putting the Articles of Confederation in the wastebasket
and bringing forth an entirely new document of their own devising.

Again, when
the Constitution was promulgated, similar economic interests in
the several states had laid hold of it and pushed it through to
ratification in the state conventions as a minority measure, often
– indeed, in the majority of cases – by methods that had
obvious intent to defeat the popular will. Moreover, and most disturbing
fact of all, the administration of government under the Constitution
remained wholly in the hands of the men who had devised the document,
or who had been leaders in the movement for ratification in the
several states. The new president, Washington, had presided over
the Constitutional Convention. All the members of the Supreme Court,
the judges of the federal district courts, and the members of the
cabinet were men who had been to the fore either in the Philadelphia
Convention or in the state ratifying conventions. Eight signers
of the Constitution were in the Senate, and as many more in the
House. It began now to be manifest, as Madison said later, who was
to govern the country; that is to say, in behalf of what economic
interests the development of American constitutional government
was to be directed.

Mr. Jefferson
was slow to apprehend all this. He had hitherto regarded the Constitution
as a purely political document, and having that view, he had spoken
both for it and against it. He had criticized it severely because
it contained no Bill of Rights and did not provide against indefinite
tenure of office. With these omissions rectified by amendment, however,
he seemed disposed to be satisfied with it. Its economic character
and implications apparently escaped him, and now that for the first
time he began, very slowly and imperfectly, to get a sense of it
as an economic document of the first order, he began also to perceive
that the distinction between Federalist and anti-Federalist, which
he had disparaged in his
letter to [Francis] Hopkinson
, was likely to mean something
after all.

He set out
on March 1, 1790, for New York, the temporary capital, where he
found himself a cat in a strange garret. Washington and his entourage
greeted him cordially, and the "circle of principal citizens"
welcomed him as a distinguished and agreeable man. He had grown
handsomer as he approached middle age, and his elaborate French
wardrobe set him off well. His charm of manner was a reminiscence
of Fauquier; he was invariably affable, courteous, and interesting.

The people
of New York could have quite taken him to their hearts if they had
not felt, as everyone felt in his presence, that he was always graciously
but firmly holding them off. Yet if they had any suspicions of his
political sentiments and tendencies, they put them in abeyance;
his attitude towards the French Revolution had shown that he was
amenable to reason. As soon, no doubt, as this well-to-do, well-mannered,
highly cultivated, and able man of the world saw which way the current
of new national ideas was setting, he would easily fall in with
it.

At any rate,
everything should be made easy for him. "The courtesies of
dinner parties given me, as a stranger newly arrived among them,
placed me at once in their familiar society."[1]
But every hour thus spent increased his bewilderment. Everyone talked
politics, and everyone assiduously talked up a strong government
for the United States, with all its costly trappings and trimmings
of pomp and ceremony. This was a great letdown from France, which
he had just left

in the first
year of her revolution, in the fervor of natural rights, and zeal
for reformation. My conscientious devotion to these rights could
not be heightened, but it had been aroused and excited by daily
exercise.[2]

No one in New
York was even thinking of natural rights, let alone speaking of
them. The "principal citizens" held the French Revolution
in devout horror. "I can not describe the wonder and mortification
with which the table conversations filled me." Where indeed
was the old high spirit, the old motives, the old familiar discourse
about natural rights, independence, self-government? Where was the
idealism that these had stimulated – or the pretence of idealism
that these had evoked?

One heard nothing
here but the need for a strong government, able to resist the depredations
which the democratic spirit was likely to make upon "the men
of property," and quick to correct its excesses. Many even
spoke in a hankering fashion about monarchy. All this, manifestly,
was nothing to be met with the popgun of Constitutional amendments
providing for a Bill of Rights and rotation in office; manifestly,
the influential citizenry of New York would but lift their eyebrows
at a fine theoretical conception of the United States as a nation
abroad and a confederacy at home.

Mr. Jefferson’s
ideas were outmoded; nothing was of less consequence to the people
about him; he might have thought himself back in Paris in the days
of Calonne, at a soirée of the Farmers-General. Other ideas
were to the front; and when Washington’s cabinet came together,
Mr. Jefferson confronted the coryphaeus[3]
of those ideas in the person of a very young and diminutive man
with a big nose, a giddy, boyish, and aggressive manner, whom Washington
had appointed secretary of the treasury.

II

Alexander Hamilton
came to the colonies at the age of sixteen, from his home in the
West Indies, dissatisfied with the prospect of spending his days
in "the groveling condition of a clerk or the like … and
would willingly risk my life, though not my character, to exalt
my station. … I mean to prepare the way for futurity."

This was in
1772. He found the country ripe for him. There was something stirring
all the time, something that an enterprising young man might get
into with every chance to make himself felt. At 18 he came forward
in a public meeting with a harangue on the Boston Port Bill,[4]
and he presently wrote a couple of anonymous pamphlets on public
questions, one of which was attributed by an undiscriminating public
to John Jay, who, as Mr. Jefferson said, wielded "the finest
pen in America," and therefore resented the imputation of authorship
with a lively chagrin. He showed his bravery conspicuously on two
occasions in resisting the action of mobs: once to rescue the Tory
president of King’s College, now Columbia; and once to rescue another
Tory named Thurman.[5]

He saw that
war was almost certainly coming on, bearing a great chance of preferment
to the few in the colonies who had learned the trade of arms; so
he studied the science of war, and the outbreak of hostilities found
him established as an artillery officer. He had an unerring instinct
for hitching his fortunes to the right cart-tail. Perceiving that
Washington would be the man of the moment, he moved upon him straightway,
gained his confidence, and remained by him, becoming his military
secretary and aid-de-camp.

But the war
would not last forever, and Hamilton had no notion of leading the
life of a soldier in time of peace. Arms were a springboard for
him, not a profession. He served until the end of the campaign of
1781, when he retired with some of the attributes of a national
figure and with the same persistent instinct for alliance with power.
He always gave a good and honorable quid pro quo for his
demands; he had great ability and untiring energy, and he threw
both most prodigally into whatever cause he took up.

Money never
interested him. Although he inaugurated the financial system which
enriched so many, he remained all his life quite poor, and was often
a good deal straitened. Even in his career as a practicing lawyer,
conducting important cases for wealthy clients, he charged absurdly
small fees.

His marriage
in 1780 with one of the vivacious Schuyler girls of Albany, made
him a fixture in "the circle of principal citizens" of
New York; it was a ceremony of valid adoption.[6]
He was elected to Congress in 1782, he served as a delegate to the
Constitutional Convention in 1787, and now he was in the cabinet
as the recognized head of the centralizing movement.

The four great
general powers conferred by the Constitution upon the federal government
were the power of taxation, the power to levy war, the power to
control commerce, and the power to exploit the vast expanse of land
in the West. The task now before Congress was to pass legislation
appropriate to putting these powers into exercise. There was no
time to be lost about this. Time had been the great ally of the
coup d’état.

The financial,
speculative, and mercantile interests of the country were at one
another’s elbow in the large towns, mostly on the seaboard; they
could communicate quickly, mobilize quickly, and apply pressure
promptly at any point of advantage. The producing interests, which
were mostly agrarian, were, on the other hand, scattered; communication
among them was slow and organization difficult. It was owing to
this advantage that in five out of the thirteen states, ratification
of the Constitution had been carried through before any effective
opposition could develop. Now, in this next task, which was, in
Madison’s phrase, to administration the government into such
modes as would ensure economic supremacy to the non-producing interests,
there was urgent need of the same powerful ally, and here was the
opportunity for the great and peculiar talents that Alexander Hamilton
possessed.

Perhaps throughout,
and certainly during the greater part of his life, Hamilton’s sense
of public duty was as keen as his personal ambition. He had the
educated conscience of the arriviste with reference to the
social order from which he himself had sprung. A foreigner, unprivileged,
of obscure origin and illegitimate birth, "the bastard brat
of a Scots pedlar," as John Adams testily called him, he had
climbed to the top by sheer force of ability and will.

In his rise
he had taken on the self-made man’s disregard of the highly favorable
circumstances in which his ability and will had been exercised;
and thus he came into the self-made man’s contemptuous distrust
of the ruck of humanity that he had left behind him. The people
were "a great beast," irrational, passionate, violent,
and dangerous, needing a strong hand to keep them in order. Pleading
for a permanent president and Senate, corresponding as closely as
might be to the British model of a king and a House of Lords, he
had said in the Constitutional Convention that all communities divide
themselves into the few and the many, the first being

the rich
and well born, the other the mass of the people. … The people
are turbulent and changing; they seldom judge or determine right.
Give therefore to the first class a distinct permanent share of
government. … Nothing but a permanent body can check the imprudence
of democracy. Their turbulent and uncontrollable disposition requires
checks.[7]

He had no faith
in republican government, because, as Gouverneur Morris acutely
said, "he confounded it with democratical government; and he
detested the latter, because he believed it must end in despotism,
and be in the meantime, destructive to public morality."[8]

But republican
government was here, and he could not change it. Of all among "the
rich and well-born" who talked more or less seriously of setting
up a monarchy, there was none doubtless unaware that the republican
system could hardly be displaced, unless by another coup d’état
made possible by some profound disturbance, like a war. Hamilton,
at any rate, was well aware of it.

The thing,
then, was to secure the substance of absolutism under republican
forms; to administration republican government into such
absolutist modes as the most favorable interpretation of the Constitution
would permit. Here was the line of coincidence of Hamilton’s aims
with the aims of those who had devised and promulgated the Constitution
as an economic document. These aims were not identical, but coincident.

Hamilton was
an excellent financier, but nothing of an economist. Insofar as
he had any view of the economics of government, he simply took for
granted that they would, as a matter of course and more or less
automatically, arrange themselves to favor "the rich and well-born,"
since these were naturally the political patrons and protectors
of those who did the world’s work. In a properly constituted government,
such consideration as should be bestowed upon the producer would
be mostly by way of noblesse oblige.

The extent
of his indifference to the means of securing political and economic
supremacy to "the rich and well-born" cannot be determined,
yet he always frankly showed that he regarded over-scrupulousness
as impractical and dangerous. Strong in his belief that men could
be moved only by force or interest, he fearlessly accepted the corollary
that corruption is an indispensable instrument of government, and
that therefore the public and private behavior of a statesman may
not always be answerable to the same code.

Hamilton’s
general plan for safeguarding the republic from "the imprudence
of democracy" was at bottom extremely simple. Its root idea
was that of consolidating the interests of certain broad classes
of "the rich and well-born" with the interests of the
government. He began with the government’s creditors. Many of these,
probably a majority, were speculators who had bought the government’s
war bonds at a low price from original investors who were too poor
to keep their holdings.

Hamilton’s
first move was for funding all the obligations of the government
at face value, thereby putting the interests of the speculator on
a par with those of the original holder, and fusing both classes
into a solid bulwark of support for the government. This was inflation
on a large scale, for the values represented by the government’s
securities were in great part – probably 60 percent –
notoriously fictitious, and were so regarded even by their holders.
A feeble minority in Congress, led by Madison, tried to amend Hamilton’s
measure in a small way, by proposing a fair discrimination against
the speculator, but without success.

Before any
effective popular opposition could be organized, Hamilton’s bill
was driven through a Congress which reckoned nearly half its membership
among the security-holders. Its spokesmen in the House, according
to [Sen. William] Maclay, who listened to the debate, offered little
argument, and contented themselves with a statesmanlike recourse
to specious moralities.

Ames
delivered a long string of studied sentences … He had "public
faith," "public credit," "honour, and above
all justice," as often over as an Indian would the "Great
Spirit," and if possible, with less meaning and to as little
purpose. Hamilton, at the head of the speculators, with all the
courtiers, are on one side. These I call the party who are actuated
by interest.[9]

Hamilton’s
own defense of indiscriminate funding was characteristic; he declared
that the impoverished original holders should have had more confidence
in their government than to sell out their holdings, and that the
subsidizing of speculators would broadcast this salutary lesson.

Hamilton’s
bill contained a supplementary measure which reached out after the
state creditors, united them with the mass of federal creditors,
and applied a second fusing heat. The several states which had at
their own expense supplied troops for the Revolutionary army, had
borrowed money from their citizens for that purpose; and now Hamilton
proposed that the federal government should assume these debts,
again at face value – another huge inflation, resulting in
"twenty millions of stock divided among favored States, and
thrown in as pabulum to the stock-jobbing herd," as Mr. Jefferson
put it.[10]

Two groups
of capitalist interest remained, awaiting Hamilton’s attentions:
one of them actual, and the other inchoate. These were the interest
of trade and commerce, and the interest of unattached capital looking
for safe investment. There was no such breathless hurry about these,
however, as there had been about digging into the impregnable intrenchments
of funding and assumption.

The first group
had already received a small douceur in the shape of a moderate
tariff, mostly for revenue, though it explicitly recognized the
principle of protection; it was enough to keep them cheerful until
more could be done for them. Considering the second group, Hamilton
devised a plan for a federal bank with a capital of $10,000,000,
one-fifth of which should be subscribed by the government, and the
remainder distributed to the investing public in shares of $400
each. This tied up the fortunes of individual investors with the
fortunes of the government, and gave them a proprietary interest
in maintaining the government’s stability; also, and much more important,
it tended powerfully to indoctrinate the public with the idea that
the close association of banking and government is a natural one.

There was one
great speculative interest remaining, the greatest of all, for which
Hamilton saw no need of taking special thought. The position of
the natural-resource monopolist was as impregnable under the Constitution
as his opportunities were limitless in the natural endowment of
the country. Hence the association of capital and monopoly would
come about automatically. Nothing could prevent it or dissolve it,
and a fixed interest in the land of a country is a fixed interest
in the stability of that country’s government – so in respect
of these two prime desiderata, Hamilton could rest on his oars.

In sum, then,
the primary development of republicanism in America, for the most
part under direction of Alexander Hamilton, effectively safeguarded
the monopolist, the capitalist, and the speculator. Its institutions
embraced the interests of these three groups and opened the way
for their harmonious progress in association. The only interest
which it left open to free exploitation was that of the producer.
Except insofar as the producer might incidentally and partially
bear the character of monopolist, capitalist, and speculator, his
interest was unconsidered.

Editor’s
Notes

[1]
Thomas Jefferson, The
Anas / From the Writings of Thomas Jefferson: Volume 1
,
ed. Albert Ellery Bergh (Washington, DC: Thomas Jefferson Memorial
Association, 1903): p. 270.

[2]
Ibid.

[3]
Greek word literally meaning "leader of the chorus."

[4]
14 Geo. 3 c.19. One of the so-called Intolerable Acts passed by
the British Parliament in response to the Boston Tea Party; this
bill closed the Port of Boston until restitution was made to the
King’s treasury and the East India Company.

[5]
An apparent reference to Ralph Thurman, a New York merchant who
ignored a colonist boycott of English goods. The Sons of Liberty
"attempted to tar and feather him, but he fled." See
Willard Sterne Randall, Alexander
Hamilton: A Life
(New York: Harper Collins, 2003): p.
86.

[6]
Hamilton married Elizabeth Schuyler (1757–1854), the second
daughter of Philip Schuyler, a former major general in the Continental
Army and later a US senator.

[7]
This relies on an account of Hamilton’s June 18, 1787, speech
to the convention by Robert Yates, a fellow delegate representing
New York. Yates’s original notes read as follows: "All communities
divide themselves into the few and the many. The first are the
rich and well born, the other the mass of the people. The voice
of the people has been said to be the voice of God; and however
generally this maxim has been quoted and believed, it is not true
in fact. The people are turbulent and changing; they seldom judge
or determine right. Give therefore to the first class a distinct,
permanent share in the government. They will check the unsteadiness
of the second, and as they cannot receive any advantage by a change,
they therefore will ever maintain good government. Can a democratic
assembly, who annually revolve in the mass of the people, be supposed
steadily to pursue the public good? Nothing but a permanent body
can check the imprudence of democracy. Their turbulent and uncontroling
disposition requires checks." See "Notes
of the Secret Debates of the Federal Convention of 1787, Taken
by the Late Hon Robert Yates, Chief Justice of the State of New
York, and One of the Delegates from That State to the Said Convention."

[8]
Anne Cary Morris, ed., The Diary and Letters of Gouvernur Morris,
vol. 2 (New York: Charles Scribner’s Sons, 1888): p. 523.

[9]
Edgar S. Maclay, ed., Journal
of William Maclay, United States Senator from Pennsylvania 1789–1791

(New York: D. Appleton & Co., 1890): p. 197.

(The original
punctuation, which Nock had altered, has been restored.)

[10]
Jefferson, The Anas, p. 276.

Reprinted
from Mises.org.

Albert
Jay Nock (1870–1945) was an influential American libertarian
author, educational theorist, and social critic. Murray Rothbard
was deeply influenced by him, and so was that whole generation of
free-market thinkers. See Nock’s The
State of the Union
.

The
Best of Albert Jay Nock

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