Until recent years, Hamilton was no hero. He was remembered as a big government elitist. Gallatin was a man of the people who wanted to keep government in check…
Excerpts of an article by Gregory May first published in The Washington Examiner…
Alexander Hamilton’s worst enemy was not who Broadway thinks it was
Aaron Burr may have killed Alexander Hamilton, but it was Albert Gallatin who killed Hamilton’s system for funding federal deficits.
Hamilton was proud of that system. He thought the ability to borrow endless amounts of money would allow the new United States to become a great nation. Gallatin disagreed. He thought that endless government borrowing was a drag on the private sector and a prescription for economic failure. In the first great fight over how to pay for the federal government, Gallatin won.
Albert Gallatin was Hamilton’s successor as secretary of the Treasury. He had been the leading critic of Hamilton’s financial system in Congress, and President Thomas Jefferson appointed him to the Treasury so that he could dismantle what Hamilton had done. There was nothing innovative about Hamilton’s system — he had simply borrowed it from the British.
That was a problem according to men like Jefferson and Gallatin, who believed this system was tainted with British tyranny. It made the people pay obnoxious taxes in order to fund interest payments on a mounting federal debt and the costs of an expensive military establishment. It shifted money from ordinary taxpayers to the relatively few rich men who held the government’s bonds. That was just the sort of thing that had led Americans to revolt against Britain in the first place.
Americans had already rebelled against Hamilton’s system. Six years before Jefferson became president, Gallatin’s neighbors in the backwoods of Pennsylvania took up arms against Hamilton’s tax on whiskey. They burned the local tax collector’s house, robbed the mail, and marched on Pittsburgh. Although Gallatin opposed the violence, Hamilton blamed him and his friends for inciting the protests that produced it. George Washington called out the militia, and Hamilton led troops into Gallatin’s home district. Gallatin managed to slip away to safety in Philadelphia while the soldiers were thrashing the woods to find him. “There Never Was More industry made by any Set of men,” his nearest neighbor told him, as “there Was by Some that Was hear to get Holt of You.”
An angry New York crowd disgusted with the federal government’s pro-British policies stoned Hamilton a year later. And Gallatin’s father-in-law, a feisty naval officer named Commodore Nicholson, openly insinuated that Hamilton was a British agent. Hamilton did not deny the charge, so Nicholson called him a coward. That left a man of honor like Hamilton no choice. He challenged Nicholson to a duel. Their friends managed to patch things up without bloodshed, but Nicholson despised the man he called “Hambleton” until the day that he died. When Hamilton later met his infamous end in another duel, Gallatin commented that the public should not have maligned Burr for killing him. “The duel, for a duel, was certainly fair,” he said. What had Hamilton expected?
Once Gallatin took over the Treasury, he immediately reformed federal finance. Hamilton had never firmly committed to pay anything more than the interest on the government’s debt. Gallatin, however, committed the government to repaying fixed amounts of the principal each year and insisted that the government should never spend more than it earned except in times of war. By slashing federal expenses, Gallatin was able to get rid of the tax on whiskey and abolish the entire internal revenue service. When he left office 12 years later, Gallatin had repaid almost half of the government’s debt. “Peace, economy, and riddance of public debt” was Jefferson’s mantra, and Gallatin had made it a reality. Gallatin’s frugal system set a new standard. Twenty years later, when Andrew Jackson was president, the federal government repaid its last dollar of debt. For most of the next hundred years, the federal government paid its annual expenses with the import duties it collected except when war required heavy spending.
A statue of Alexander Hamilton stands on the back side of the main Treasury building in Washington, but a larger statue of Albert Gallatin dominates the front of the building beside the White House. That is no accident. Until recent years, Hamilton was no hero. He was remembered as a big government elitist. Gallatin was a man of the people who wanted to keep government in check.
Perhaps if Broadway had not turned a mythical Hamilton into a pop icon, we would be rapping about Gallatin and keeping our budget fiscally tight.
Gregory May is the author of Jefferson’s Treasure: How Albert Gallatin Saved the New Nation from Debt (Regnery History; August 7, 2018). Mr. May worked as a corporate tax lawyer in D.C. and New York for 30 years.
This article was first published on Washington Examiner on 12 Aug. 2018