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Every year or two, we are reintroduced by our leading historians to one or more of the nation's founding fathers. One year John Adams and his wife Abigail came as a revelation, another brought a new slant on Thomas Jefferson. Even more than Ben Franklin, who celebrated his 300th birthday last year and was the subject of a bestselling biography, the Founding Father of the moment is Alexander Hamilton. Well served by his star turn in Joseph Ellis' The Founding Brothers, Hamilton took center stage alone in Ron Chernow's superb 2004 biography.
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Hamilton's story makes clear that the genius of the founding generation lay not just in the unlikely military success of the Revolution and the political brilliance of the Declaration of Independence and the Constitution (although Hamilton participated in these too, serving as an officer in Washington's army and penning many of the Federalist papers defending the Constitutional experiment). The third leg of the three-legged stool—the least appreciated—was finance. Establishing a credible national currency and a relatively stable banking system enabled the new nation to attract foreign investment and to finance the "nation of shopkeepers" that Tocqueville would discover during his wanderings several decades later.
Just about everything that went right with America's markets and finance can be attributed in one way or another to Hamilton. To refute Jefferson's claim that Congress did not have the power to establish a national bank, Hamilton concocted a theory of implied powers that persuaded President George Washington to sign the Bank of the United States, the first of two national banks, into existence. Hamilton also insisted that the new national government should assume, or repay, all of the old obligations of the states, even the debt owed to foreigners. To achieve this objective, he brokered one of the most remarkable political deals in American history: in return for a promise that the nation would establish its capital on the Potomac, not in New York or Philadelphia, Jefferson and Madison agreed to support assumption. A report by Hamilton also led to the founding of the mint and established the dollar as the nation's unit of account.
Hamilton was truly without peer, but a handful of others also played essential roles in the first decades of the nation's financial life. In Financial Founding Fathers, Robert Wright and David Cowen seek to resurrect these mostly forgotten figures and to foreground the role of banking and finance in America's emergence as a great power. The story begins and ends with the best known of the authors' characters, starting with Hamilton and concluding with Andrew Jackson and his foil Nicholas Biddle, who battled over the decision whether to extend the charter of the second national bank. (As promised in his 1832 election campaign, Jackson killed the bank, withdrawing government deposits even before the bank's charter expired in 1836.) In between, Wright and Cowen feature six less familiar figures, a few of them heroes (Albert Gallatin, Thomas Willing, Stephen Girard), one a villain (William Duer), the remainder a complex mix (Tench Coxe, Robert Morris).
The opening chapter suggests that Wright and Cowen will explore their subjects' religious commitments. The words "In God We Trust" on our coins, they write, "remind us that money, finance, the early nation, and religion are intertwined … . In fact, the source most widely cited by the Revolutionaries was not John Locke or Montesquieu, but Deuteronomy." The authors also assign a religious label to each of their subjects. Hamilton is the "Creator," Tenche Coxe the "Judas," Gallatin the "Savior," Willing and Morris "Angels Risen and Falling." But the religious motifs are a tease, thrown in simply to provide a narrative framework, finance as a morality tale. Virtually the only other reference to religion or religious commitments in the entire book is the authors' observation that "Jackson dueled repeatedly, took bullets, and somehow, perhaps by the grace of God, survived."
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