Second Forum – Jefferson or Hamilton

Second Forum – Jefferson or Hamilton
The Following is the Second Forum Question:

Second Forum – Jefferson or Hamilton?

M2 Content Guide – Republicanism and Virtue
Republicanism and Virtue

The Founders were well read men of their times which meant that their readings reached back into antiquity, the Renaissance, and contemporary writings out of Europe of the 18th century. They knew that the concept of a republic went back to antiquity and the writings of Plato, Plutarch and others. They knew also that they were doing more than simply overthrowing a monarch and adopting a new form of government which happened to be a republic. Finally, they knew from those readings that a republic had a history of failure, collapsing more times than not because of its own inherent fragility. Why was a republic seen to be fragile when compared to a monarchy? It was fragile because it had certain built in limitations in the minds of the writers of the past all of who were familiar to the founders. A republic demanded more of its citizens than the monarchy. A monarchy was built upon control of its subjects by force or fear, utilized patronage and status and relied upon a standing army to maintain it all. The republic depended upon the volunteer, the willingness of the citizen to step and defend it when circumstances demanded it. At its base, the republic required the private citizen to put aside his private interests and desires for the public good; the private citizen must be disinterested, without interest, which the writers of the past used as a synonym for virtue. It was this reliance upon the virtue of its citizenry and their capacity for self-sacrifice that made the republic so fragile and ultimately caused their failure. Those writers of antiquity followed by Machiavelli and later Montesquieu in the 18th century wrote that republics depended upon virtue and must be small in size with a homogeneous society. A large or diverse republic was doomed to fail once it developed diverse interests and its citizens became corrupted by self interest. Madison, Hamilton, Jefferson and the others had all read these authorities and shared the same understanding of republican virtue and the perils that were built into the very nature of man and society. Madison saw a solution in the institutional framework of the constitution which will be discussed in Module 4. Jefferson believed that the united states were best kept in the form of a confederacy as under the Articles of confederation. He envisioned a group of small republics operating independently and only joined for defense against a foreign invaded. Hamilton actually favored the monarchy and fully expected the new nation to morph into new equivalent of Great Britain with a House of Commons and executive designed on the monarchy.
Madison and Factions

Federalist Paper No. 10 is one of the most studied and quoted essay in contemporary Founding literature. Daniel Shays and his rebellion in September 1786 very likely inspired this essay and some of the talk in May of 1787 at the Philadelphia convention. Shays was a desperate debtor to some observers and a dangerous indicator to others. “Among the numerous advantages promised by a well constructed union, none deserves to be more accurately developed than its tendency to break and control the violence of faction. The friend of popular governments never finds himself so much alarmed for their character and fate, as when he contemplates their propensity to this dangerous vice. He will not fail, therefore, to set a due value on any plan which, without violating the principles to which he is attached, provides a proper cure for it. The instability, injustice, and confusion introduced into the public councils, have in truth been the mortal diseases under which popular governments have everywhere perished; as they continue to be favorite and fruitful topics from which the adversaries to liberty derive their most specious declamation.”

There is no outline that does justice to the style and content of Federalist No. 10 like a careful reading of the text itself. By revealing his revulsion for factions and defining them as broadly as possible, it is clear that Madison’s definition of republicanism is the antithesis of the faction. If we turn his definition of faction on its head, we see how the republic is dependent upon the virtuous citizen, the citizen who acts out of public good and not self interest. Read it for content and you will come to the penultimate paragraph in which he predicts the influence of the “factious leader” will limited to a single state because of the constraints in the Constitution. Look for virtue in this essay by reading about the absence of it in one of Madison’s finest essays.

Hamilton and Mercantilism

Post revolutionary America was suddenly free of British rule and encumbered with a huge amount of war debt totally some $79 million. The debt was in three forms and was the result of financing the longest war in the nation’s history prior to the Vietnam War of the 20th century. Eight years of war in which three armies had roamed the limits of the thirteen coastal colonies had forced the national government operating under the Articles of Confederation to borrow $12 million from Dutch bankers and the governments of France and Spain plus another $42 million from domestic sources. Similarly the States had individually borrowed a total of $25 million without any plan for payment. States had given out notes during the war and they had been discounted by the holders and bought up by speculators for a fraction of their worth. The same speculators had purchased large portions of the national debt as well. Much of the national debt was also held by foreign nations negotiated during the war by overseas representatives. The debate over repayment included the consideration of default on the entire debt, payment to only persons or holders who were not speculators and paying only the foreign nations. The reputation of the new nation was involved and citizens and the nations of the world were watching to see whether the new United States would make good on its word and repay its debts. The sources of revenue for payment were limited and the States were considering various forms of property and income taxes to collect the funds necessary to make payment.

Congress requested the secretary of the Treasury Alexander Hamilton to propose a plan for payment and he returned nine months later with a fifteen thousand word paper offering a plan for payment which was modeled upon the work of Sir Robert Walpole in England during the early 18th century when it faced a similar financial crisis generated by war debts. Their debts had been incurred during the wars of the 17th century and the country faced financial collapse. Walpole, following the theories of Adam Smith and Sir Robert Steuart created the Bank of England, centralized the debt, and allowed the bank to issue notes that were negotiable and served as money. Instead of working to pay off or retire the debt, Walpole created a sinking fund that was allowed to exist to the benefit of the government and the creditors. The holders of the notes essentially owned a stake in the government and received interest only on the debt. With no intention of ever retiring the debt, citizens and businesses held the notes and fund3ed the government. His was a controversial plan and drew criticism from the English Whigs who saw the plan as a commercialization of the British Empire and a corruption of the House of Commons and British society. Fifty years later, Hamilton modeled his plan on that of Walpole with the three key elements of funded debt, a national bank with negotiable notes, and a national mint. It had both financial and political elements that appealed to its Federalist supporters and Republican opponents.

Hamilton’s plan called for the federal government to accumulate all the Revolutionary war debt, both State and Federal and create a sinking fund which would honor all holders of the debt from whatever source they originated. All would be paid a fair rate of interest on the debt and the notes could be exchanged, purchased and circulated based upon market value. The ostensible process would eventual lead to retirement of the debt although Hamilton, like Walpole, had no intention to actually retire the debt since it would be replaced and augmented with new debt as the government saw necessary. Over the course of time, investors would see the United States as risk free investment and would look to buy the notes as investments instead of looking at them as actually loans to the government to finance its activities. The vehicle for this plan would be the Bank of the United States with a national mint. Hamilton’s plan called for a twenty year renewable charter for the bank empowering it and only it to issue the certificates and maintain the fund of debt. The new certificates would become the currency of the nation and serve as money. He proposed a decimal system which he lifted from Jefferson. Investors would purchase the notes from the bank and would be paid interest only until they sold the notes to other holders in exchange for goods and services. The financial effect of all of this would be to save the credit name of the young nation and develop the confidence of creditors in addition to creating a permanent and consolidated debt. The political effect was to relieve the war debt of the states and eliminate the need for them to impose new and burdensome taxes upon their citizens. More importantly, to Hamilton and other Federalists, the step would be one in a line of steps intended to wean the citizens’ loyalties away from their state governments and align them with the national government. The bank and the minting of coin would show the strength of the central government. This was consistent with the denial of the power to print money or mint coin to states in the letter of the Constitution itself. Please use these references: 1.Revolutionary Characters what made the founders different Gordon S Wood 2.Novus Ordo Secorum the intellectual origins of the constitution Forrest McDonald 3. The ideological origins of the american revoultion Bernard Bailyn


The Founders had two opposing ideas of the politics and the role of the government in the United States. On the one hand, people like Jefferson believed that American democracy should be similar to that of Ancient Greece, that is America, should practice republicanism (not the Republican Party). Republicanism requires that all citizens practice civic virtues. Civic virtues require that citizens take an active part in government. Each citizen must, be well inform of public policies; each must engaged in political debate either in the public realm (town hall meetings) or in the more private realm (discussing politics among friends and family); each citizen should always seek the public interest before their personal interest. This could only be achieved at the local level; thus, America should be comprised of many smaller communities and each community is responsible for most of the public services, roads, education, parks, waste disposals, etc. Jefferson believed this could best be achieved if American remained an agrarian society. Farmers are honest and have the public interest placed before their personal wealth. This means that American should not become an industrial and commercial giant. Commerce serves to corrupt elites and exploit non-elites.


On the other hand, other Founders, like Hamilton (a Federalist), disagreed. America should develop its large port cities like New York, Boston, Charleston, and Philadelphia. They believed this could only be accomplished through a more centralize, energetic, and powerful national government. People are innately fickle, greedy, ambitious, or completely lazy. That is, Jefferson’s republic of farmers is only a dream but does not address reality. Ultimately, becoming an industrial and commercial giant would benefit all. Hamilton would probably have agreed with the General Motors saying, “What is good for GM is good for the country.” The citizens then should leave most of the decision making to elites, or those who have the best abilities to lead the country. Citizens should become active in government only to the extent that they choose the leaders who will represent them.



Who do you agree with, Jefferson or Hamilton, and why? What do you think we had for most of the country’s history? What do we have today? Is it good?

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