Hamilton's Curse

0:00Good morning, welcome to the program, 13 minutes after 6 o'clock, 6.13 on 1460 KION. Mark Carbonero with you on Wake Up Monterey, your KION community forum. To kick off the program this morning, we have a very special guest to join us, and that is Dr. Thomas DiLorenzo. Now, Dr. DiLorenzo is a professor of economics at Loyola College in Maryland. He's also a senior fellow at the Mises Institute, which is in Auburn, Alabama, and he is not only and Economics, and a historian, and he brings a unique perspective to American history because he is able to not only tell the history of what happened, but oftentimes the economic motivation behind a lot of things that happened in our history, and that's a very important consideration.

0:49You know, you remember the old Watergate saying, follow the money, well, it's the same thing when you're looking at history. You have to follow the money to know what happened and what was going on. Tom, welcome to the program. I'm pleased to be with you this morning. Hey, thank you very much for joining us. I got to tell you, I really enjoyed your exchange recently on the Morning Joe program with Pat Buchanan. That was a lot of fun watching the two of you talk about US history and what I thought was really interesting was as you and Pat were talking about various economic downturns and what caused them. And obviously the two of you know your subject matter pretty well. I was watching the faces of the co-hosts and they had no idea where you guys were going or what you were talking about.

1:36That's very true. They are media people talking heads after all, they're not economists or historians like me or Pat Buchanan. But you know, I think part of the reason that we're in such a terrible fix today is is the fact that by and large, the general population knows or cares little to know about our history and our economic history and how we got to the point where we are today. And often times when people hear these things, they're like revelations to them. For example, the latest book that you have written is about Alexander Hamilton and it's called Hamilton's Curse and we want to talk about that book this morning because I think I think it's an important book. It's Hamilton's Curse, How Jefferson's Arch-Enemy Betrayed the American Revolution and What It Means to Americans Today. All right. What exactly is Hamilton's Curse, Tom?

2:35Well, I call Alexander Hamilton the founding father of crony capitalism. He was a political genius among other things, but his agenda, his political agenda was to tie the interests of the most affluent or more wealthy people of the country to the government by making them bondholders, by issuing a lot of government debt, and he thought that these bondholders then would provide political support forever for bigger government, higher taxes, and just a more expansive government than what the Constitution itself called for, and that was Hamilton's agenda. There was one political scientist who called him the Rousseau of the Right, and Rousseau

3:45of the United States. And oddly enough, I've written this book about Alexander Hamilton's economics, and it really does explain the dilemma we're in today, because, you know, what is the bailout, the Wall Street bailout, but crony capitalism? Absolutely. You know, I was struck by something that you said about him, you know, being that he was the first Secretary of the Treasury. He was an appointed bureaucrat, and he was the first one to start the long line of Unaccountable Appointed Bureaucrats That Have Great Power Control Over the Lives of Average Americans

5:12of the Constitution, it really does nothing to restrain the government, and whenever politicians do bring up the Constitution, it's just to make the point that, well, what we are doing is constitutional because we say it is. Right, exactly. It sounds like that Supreme Court Justice from the 1930s in justifying many of the programs in the New Deal. Yeah, I quote a historian of the Constitution who was a New Deal liberal, and he was very I'm very happy writing the 1950s of the fact that Hamilton's view of the Constitution had prevailed by then, that the words of the Constitution had been twisted so much that it was essentially meaningless as a restriction on governmental power, and this man, this was Clinton Rossiter was the man's name. He taught history at Cornell for many years, but they were celebrating the Hamiltonian view of the Constitution way back in the 50s, and it's only gotten worse since then, in my view.

6:08You know, Tom, one of the things that you write in the book and you cover in there is how one of the things that Hamilton did was to wrest control into the hands of the federal government by inventing the myth of the Constitution's implied powers. Where did Hamilton find the implied powers that he could exploit in a way that gave him that much power? Well, this came about in his debate with Thomas Jefferson over the constitutionality of a central bank. Jefferson said, no, the Constitution would have to be amended to have such a thing, because of course a bank like that was not among the delegated powers in Article 1, Section 8 of the Constitution. And that's when Hamilton invented the idea of implied powers. He said, well, you have to read between the lines to find these things. And Jefferson pretty much responded by saying, well, I have read between the lines and there's blank space there.

6:58But Hamilton prevailed, we got this bank, and then jurists from then on, especially his friend John Marshall, who was the Chief Justice for 34 years, beginning in 1801, used this idea of implied powers of the Constitution to really eviscerate the constitutional constraints on government that were the original intent. You know, I understand that your book was just published yesterday officially, the 21st of October. Right. And it should be out in the stores now if we want to get a copy of it. Wherever books are sold including Amazon.com and Barnesandnoble.com. One of the things I wanted to ask you about was one of the things that Hamilton did was he tried to establish an imperial presidency and he proposed that the presidents be permanent.

7:47But do you think that the concept of the UET, the unified executive theory of the president comes from Hamilton? Transcription is a production of the U.S. Department of State And that's essentially what we've got now where our president now can, not only is he sort of dictatorial and he rules by executive orders, but he can send our military overseas to just about any country in the world without congressional approval and that's even far more than what even Alexander Hamilton would have envisioned in terms of a powerful or dictatorial executive.

8:49One of the things that's interesting, too, is that over the weekend we went and saw the movie W, and one of the previews, while we were waiting for the main feature to come on, they were showing some previews of a new movie, the Frost-Nixon movie, about that conversation that David Frost had with Richard Nixon, and it was at that time, as you might recall, that Richard Nixon made that rather stunning statement, one of incredible conceit, where he said, well, you know, you have to understand, David, that when the president does it, it's legal. In other words, Richard Nixon was justifying every wrong thing he'd ever done in office, or any president might do, by saying that if the president does it, it's legal. And of course, that's really an extra-constitutional view of the office.

10:03In a very minor bureaucracy, the president was never meant to be the emperor of the world, like the American presidents think of themselves today, but that is, if you were to call it anything, I would call it Hamiltonianism, because he got this idea started of having a king, essentially, who would pursue empire, and Jefferson, of course, his view of the government was, well, it's only to protect life, liberty and property, not to become an empire like the British Empire or the Spanish Empire, But that all changed throughout our history, and we certainly are an empire now, and as history teaches us, empires all eventually bankrupt themselves. Which is essentially what we are doing at this point. We are absolutely bankrupting this country, and it seems that the people in Washington, if they know, they don't care because we just seem to be going down this road.

10:53and you know i think one of the things too that i'd like you to address here is is that you know there's there's only one way to feed an empire and that's through a central bank and an internal revenue service i mean this is the thing and i'm sure this is one of the reasons why hamilton wanted these these types of policies the only way you can support an imperial presidency is through confiscatory taxation and also through the issuance of debt and inflation through a central bank. So if your vision is an executive who actually acts like a king, the only way you can support that is through the kinds of things that I mentioned. Is that necessarily the case? Well, yes. Hamilton understood that that's how the British Empire worked. They had the Bank of England printed money and financed the British Empire, and he essentially wanted to bring the British Empire here as a model of government.

11:49That's why the subtitle of my book is how Jefferson's archenemy betrayed the American Revolution. Americans just fought a revolution against that kind of government, that kind of empire. The way Hamilton and his political compatriots saw it is, it is a bad thing if you're on the paying end of an empire, but if you're on the tax collecting end, that's not a bad thing. It's good to be the king, as Mel Brooks might say. Remember that old movie about the history of the world, Mel Brooks? I think it was the king of France who he portrays as saying that, but that was basically Hamilton's idea. And of course, that's why he wanted a bank that could print money and to finance what he called imperial glory. He thought the purpose of government should be the pursuit of imperial glory and Jefferson and his followers understood that that would one, bankrupt the country eventually and two, it would eviscerate our liberties.

12:42I think that's what's happening now. Please expand for a moment on the concept of being on the receiving end of central banking and how the first users of the dollars end up making the end users pay more. Well, when the central bank prints money, the first users of the credit can benefit. Just look at the current housing boom. The original people who were in on investing in real estate, a lot of people made a lot of money. But then as prices rise, as inflation comes as a result of the printing of all this money, and so yeah, it does create great riches for some people but it's a big gamble and it usually creates a bust and a recession or a depression.

13:48the ones that were blueprinted by Alexander Hamilton as the first Treasury Secretary. Let me ask you this, how did Hamilton get this job? I mean, how did he get Washington to appoint him to be the Secretary of the Treasury? Because it sounds like George Washington wasn't a guy that believed in empire, he certainly didn't want to be President King, so how did he end up with Hamilton in there? Well, Hamilton was a trusted aide, he was the hero of the revolution, and he should

14:45And so, he had a lot of friends in New York and Wall Street and elsewhere who helped him get that job. I don't think it was only his own doing. He married a very wealthy woman from a family, the Shiler family in New York City who were very well connected and wealthy. And I'm sure that had a lot to do with his political success too. So, a guy being attached to New York bankers ends up being the Treasury Secretary. Things haven't changed very much in 200 and something years. No, I think it's a requirement for the job that you have to be the CEO of Goldman Sachs so that you can work for the benefit of Goldman Sachs as U.S. Treasury Secretary. That seems to be the rule. Do you think we're going to get out of this mess very easily? Are we stuck in the soup for a while here, Tom?

15:32Well, the government is doing everything it can to slow down or stop the necessary adjustment

16:07The last thing that someone like Hamilton would have agreed with, the other day a fellow that both you and I admire, Ron Paul, was on CNN's morning program talking with the hostess of the program and she kept hammering about this bailout and how it's going to protect small people and it's ultimately good for the economy and Congressman Paul was trying to get the point across that you just can't print money out of thin air and expect any good to come from it and she wasn't getting it.

17:07are going to be able to maybe convince people that Hamiltonian policies are ultimately destructive and we have to get away from them. Well, centralized power, high taxes, a central bank that prints money, a huge public debt, these are all Hamilton's policies and there was about a 75-year political battle over all of this in America from the time of the founding on until after the Civil War. But the Civil War was sort of a breaking point and in fact there are historians who I quote

18:07Nationalizing industries like the Republican Party and the Democrats in Congress seem to want to go, or we can wake up and reverse course. And one of the reasons I write books like this is to give some information to people to decide maybe we shouldn't follow the same old course. Maybe we should reverse this and move in a totally different direction. Well folks, this is a book you definitely want to get. I'll tell you what, this would be a great book to give to a student going into high school or one in college. Make sure they get hold of this book and read it. You'd want to read this yourself. It's called Hamilton's Curse and it's How Jefferson's Arch Enemy Betrayed the American Revolution and What It Means to Americans Today by Dr. Thomas J. DiLorenzo. Tom, thank you so much for joining us here on KION. My pleasure. Have a great day.