Post Published on December 1, 2011.
Last Updated on April 28, 2016 by davemackey.

Yesterday I dropped by the Sunday Breakfast Gospel Mission’s Thift Store (in Penndel, PA). As usual, they had a large quantity of excellent books to select from and I purchased a few (at $.50 each!). One was H.W. Brands‘ The Money Men. As of late, in part due to the economic turmoil, I have been fascinated by the economic and monetary systems, and attempting to understand how they work. So, I jumped right in and what a fascinating read it is! I’ve only finished the prologue and the first chapter – but already it has had so many insightful historical observations.

As I read through printed books I highlight, write in the margins, circle, asterisk, and so on. I then (sometimes) go back and digitize these notes so that I can refer to them later and search them quickly with the power of the computer. I did this for the prologue and first chapter but found myself moving only what I consider the most intriguing points into my digital document – which I have provided along with some commentary below¹no, I don’t usually provide any extensive commentary in my personal digital notes. I hope you find this as entertaining and informative as I have…and I’d recommend grabbing a copy of the book or giving it to anyone you know who enjoys history, politics, or economics. Amazon has copies in both hard cover and digital (Kindle) formats.

Prologue

• “For the first five generations of America’s independent history–from 1776 till the eve of World War I–a single question vexed American politics and the American economy more persistently than any other…The question was the money question.” – 15.
• “This period encompassed the emergence of the two institutions that made modern America what it is today: democracy and capitalism. From the start an inherent tension existed between the two. The driving force of democracy is equality, of capitalism inequality.” – 16.

1. The Aristocracy of Capital.

• Alexander Hamilton, born illegitimate, wrote a friend at thirteen, “I wish there was a war.” – 19.²Yes, I do sometimes pick the strangest tidbits out.
• “…Hamilton contended that economics ruled the world, eventually if not at once.” – 21.
• George Washington.
  • I include in my underlining individuals who I’d like to study more about at some juncture. I may have studied them in the past, but this reminds me to study them again or more extensively in the future. In this way each book provides dozens of jumping off points for further reading.
• “He [Hamilton] fought in the unsuccessful defense of New York…and in Washington’s retreat across New Jersey.” – 21.
  • Hamilton is well known for his political endeavors, but at least I was not cognizant of his military endeavors as well. He was apparently quite courageous in battle.
• “He [Hamilton] learned to anticipate his superior’s wishes and to supply them better than anyone else, till he became Washington’s de facto chief of staff.” – 22.
• “Armies in those days took winters off from fighting. Hamilton had time to visit friends and court the ladies.” – 23.
  • I find the daily life of folks in the past fascinating. e.g. how did they eat, work, romance, worship?
• “Money is an essential ingredient to happiness in this world….As I have not much of my own, and as I am very little calculated to get more either by my address or industry, it must needs be that my wife, if I get one, bring at least a sufficiency to administer to her own extravagances.” – Alexander Hamilton, 23.
  • I wonder if Hamilton ever told his wife about this requirement? 🙂
• “The colonial policy of the British government reflected the prevailing mercantilist notion that wealth consisted of gold and silver and that these must be hoarded in the home country. The consequence was colonial starvation for money.” – 24.
• “A national bank was the answer [though Hamilton]. Such a bank could float loans in the form of notes that would circulate as currency, but the extent of the loans would depend on the solid assets–chiefly gold and silver–at the bank’s disposal.” – 26.
  • Our currency no longer rests upon any solid asset – gold and silver being removed from involvement some number of years ago.
• Benedict Arnold.
  • How could one not be interested in studying Arnold? He was a hero for the Revolution at the Battle of Saratoga, and then turned coat!
• “Elizabeth’s [Hamilton’s wife] wealth freed him from mundane matters of livelihood and let him concentrate on winning fame.” – 29.
• Benjamin Franklin.
• John Adams.
• Thomas Jefferson.
• James Madison.
• “…Hamilton’s [Continental] congressional service was brief and frustrating.” – 30.
• “In June 1783 an angry band of Continental Army soldiers who hadn’t been paid in months surrounded the Philadelphia hall where Congress was meeting. They didn’t exactly threaten mayhem against the delegates, but the latter got the point.” – 30
  • Sounds similar to Occupy Wall Street and other national protest movements?
  • Robert Morris.
  • “In the 1780s the American economy rested on the twin pillars of agriculture and trade (manufacturing was minuscule as yet).” – 32.
  • “The merchants, many being creditors, supported a stronger currency–one that drove prices down and thereby enhanced the value of the debts they were owed. The farmers, most being debtors, analogously wanted a weaker currency and the inflation it entailed. The merchants won out and in several states imposed deflationary policies.” – 32.
  • “The farmers then demanded stay laws to prevent the seizure of their farms for nonpayment of debts. When the legislature rejected this too, the farmers took matters into their own battle-tested hands. Daniel Shays led hundreds of other Revolutionary War veterans against the courts of western Massachusetts and forcibly suspended foreclosures and the prosecution of debtors.” – 32.
    • Something similar occurred in the area I was raised – Berne, Knox, Westerlo, and so on…There is a book on the topic entitled Tin Horns and Calico.
  • James Bowdoin.
  • “Hamilton believed the current crisis demanded the creation of the strongest possible central government, which in turn required both that the central government gain power relative to the states and that the national executive be free of popular restraint.” – 34.
    • It is easy to forget that the arguments about a strong central government versus a weak one are not new…I sometimes do.
  • Hamilton proposed “The American executive should be elected for life.” – 34.
  • “Government bonds made investors of those who bought them, and investors naturally looked out for their investments. These were precisely the sort who ought to be looking out for the federal government. ‘Those who are most commonly creditors of a nation are, generally speaking, enlightened men,’ Hamilton asserted.” – 40.
    • I’d never heard this argument before…and I ponder how much it holds true. In one sense, I can see it still being true. Foreign countries do not want the United States to fail in order to maintain their investment value (as they have invested heavily in the USA)…on the other hand, this would also appear a significant instrument in war – calling debts due in order to destabilize an enemy country?
  • Hamilton believed in a national bank because “It was too much to ask of human nature to expect politicians to raise taxes when they could simply print more money.” – Ward speaking here, not Hamilton, 41.
    • Another interesting reason for a national bank…I understand what Hamilton is saying, but I’m not sure how this applied to his ideas, since the money (at that point) was to be tied to the reserves of silver and gold – so it would not have been possible to just keep printing money?
  • James Jackson.
  • Benjamin Rush.
  • William Maclay.
  • “[William] Maclay was convinced members of Congress were betting heavily on the bonds. ‘Henceforth we may consider speculation as a congressional employment.’” – 45.
  • “The southern states, dominated by planters with their feet firmly in the soil, considered themselves more fiscally responsible than their northern neighbors, where capitalists frolicked in the bustling cities.” – 46.
  • I’m not sure much has changed on this front…though this might be more around cities versus rural?
  • Adam Smith (Wealth of Nations).
  • “Banks were relatively new to America. The first, the Bank of Pennsylvania, hadn’t been founded till 1780, and at the time of Hamilton’s writing, only three banks existed. Banks were mysterious institutions that swallowed specie and regurgitated paper. This by itself made them objects of popular suspicion. The fact that bankers got rich in the process, without doing anything that looked like work to the large majority of Americans who bent and sweated for their living, made the banks seem more suspicious still.” – 49.
  • “As useful as gold and silver were when circulated as money, they were essentially dead–unable to multiply–compared to what they became when deposited or invested in a bank.” – 49.
    • This is an interesting idea, but one which I still don’t entirely understand. I guess one can easily divide paper notes, but not so easily silver or gold…but still, they are divisible, no?
  • “The beauty of a bank was that its paper issues were–or would be, under Hamilton’s scheme–tied to its supply of specie. Only by increasing its reserves could the bank expand the money it circulated.” – 51.
  • “If the abuses of a beneficial thing are to determine its condemnation, there is scarcely a source of public prosperity which will not be speedily closed.” – Alexander Hamilton, 52.
  • This is a powerful thought. I think we are on dangerous ground whenever we decide not to pursue a course of action simply b/c that course could potentially lead us “down the slippery slope.” I don’t think there is or ever can be a guarantee against the slippery slope – the passing of the baton between generations always involves the potential for the slope to slip.
  • “Much of the agrarian South now deemed his bank a plot by the capitalist North to make the federal government its plaything.” – 53.
    • Hmm…Wish he had some footnotes on what the thinking was before/during/after the American Civil War in the South?
  • “James Madison…portray[ed] the bank as unconstitutional. Madison reminded the House that the Tenth Amendment–which he had drafted, along with the rest of the Bill of Rights–declared that those powers not delegated to the federal government by the Constitution were reserved ‘to the states respectively or the people.’” – 53.
    • Madison was an advocate of stronger central government, having written the Federalist papers with Hamilton which were circulated to garner popular support for a stronger federal government.
  • “George Washington asked [Thomas] Jefferson whether he agreed that Hamilton’s bank was unconstitutional. The secretary of state [Jefferson] said he did.” – 53-4.
  • “A little difference in the degree of convenience cannot constitute the necessity which the Constitution makes the ground for assuming any non-enumerated power. Nothing but a necessity invincible by any other means can justify such a prostration of laws which constitute the pillars of our whole system of jurisprudence.” – Thomas Jefferson, 54.
  • “It [Hamilton’s bill] passed both the Senate and the House with relative ease, but partly because many legislators saw it as a way to make a personal profit. Thirty members of Congress–more than a third of the total membership, and half of those who voted in favor–became charter shareholders. This hardly surprised the strict-construction [a method of interpreting the constitution] opponents of the bank.” – 55.