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Introduction To the Hamilton-Jefferson Dispute: Getting to Know The Participants and the Era

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					Today’s Lecture:




Land v. Money as Power




                   Topic


                     3
Land as Power
                  Land as Power


Agrarian and Feudal Economics

-- Before finance capitalism arrived, land, not “money,” was
power.
-- People lived off and worked the land. Whoever controlled
land, controlled the power

  Feudalism:      -- servants were bound to work the land
                  of the Lord (“Landlord”)




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                                                               illustration
      The Domination of Landed Elites

      • Shires                           Time
      • Manor Estate
      • Duties of the Landlord
                                  Hypothetical Territory
      • Duties of the Tenant
      • Feudalism (hard and soft)
      • Affinities!                                Lord’s
          “Muster the Rohirrim!”  A
                               Hampshire             B
                                               Pembroke
                                              Manor Estate
      Y                                  h
                       C
      Y                                   C                D
                                                     Servant
                                                     High Ground
                       c                               Husbandmen
            c      c           c             h        Cottagers
                                                     Quarters, a Mill
                                                      Yeomen
                                                      The Church
  c                                                  or Oven.
                                                      Farmers
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Aristocracy -- Social Stratification
                                                      Monarchy
Great Chain of Being
                                                 Aristocracy
                                                Gentry




                                   Peasants, Serfs




                       City-dwellers, drunks




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Aristocracy -- Social Stratification
                                                      Royal Blood --
                                                      King, Queens, Princes,
        Monarchy                                      Princesses, etc.

                                                  Highest Titles;
                                                  Immense Lands

                                                  Closest to God on Earth


                                                         Divine Right




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Aristocracy -- Social Stratification


        Monarchy
                                                      Dukes and Barons of the
            Nobility
                                                      countryside

                                                      High Titles;
                                                      Immense Lands

                                                      The Great Peers




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Aristocracy -- Social Stratification


        Monarchy

            Nobility

            Gentry
                                                      2nd and 3rd sons

                                                      Primogeniture

                                                      Lower inheritance;
                                                      Less land

                                                      Justice of the Peace
                                                      Command a regiment
                                                      Jobs at Court



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Aristocracy -- Social Stratification


         Monarchy

             Nobility

             Gentry


                                                      Laborers, craftsmen,
Peasants,                                             “smiths,” peasant
Serfs                                                 farmers




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 Aristocracy -- Social Stratification


          Monarchy

              Nobility

              Gentry



Peasants,
Serfs




City-dwellers,                                         No jobs, no place to live.
drunks

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Money as Power
 “moneyed men”

 -- As the world changes, there will be a new process invented
 that determines who is “rich.”
 -- That process is the invention of finance capitalism.
 -- After (and during) industrialization, the rich are the owners of
 corporations, stock and financial houses, not the Lords of
 “estates.”
            (e.g., Bill Gates, Mitt Romney, Warren Buffet)
 -- The Industrial Revolution and the “Robber Barons.” (e.g.,
 Andrew Carnegie, John D. Rockefeller).


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How to Make Money from Money




                                    Question:
                                Can Anyone Tell Me
                               How You Make Money
                                  from Money?
Money from
 Money?
             0
             0
             0
How to Make Money from Money      Insurance
  Take some activity: driving




    Humongous                          Risk
   Pool of Capital




    Trick Question:
How does the company       Customers
pay for the cost of auto
      accidents?
How does the
company pay
  for auto     0
 accidents?    0
               0
How to Make Money from Money      Insurance


   Humongous                           Risk
  Pool of Capital       Premium




 -- Total amount of
 premiums collected
 will be larger than     Customers
 the risk
How to Make Money from Money      Insurance


   Humongous                           Risk
  Pool of Capital       Premium




 -- Total amount of
 premiums collected
 will be larger than     Customers
 the risk
How to Make Money from Money     Insurance

                        Profit


   Humongous                          Risk
  Pool of Capital




 -- Total amount of
-- The mere fact of
 premiums collected
having money can
make you more
 will be larger than     Customers
 the risk
money
Philosophy of Debt
Deficit Spending

-- Deficit Spending: when a country spends money that it
doesn’t have, through borrowing from the financial sector




                                                          Question:
                                                  Is it good or bad when
                                                 countries deficit spend?
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Everyone
 Votes!
           1.   It’s bad.                  0
           2.   It’s good.                 0
           3.   It depends.                0
           4.   I don’t know. I’m just a   0
                freshman.
 Deficit Spending

      Philosophy of Debt

-- Debts can be good or bad.
      • Bad debts = money spent for leisure, fun. (e.g., using
      credit card for beer)


                                                              Question:
                                                     What is an example of a
                                                      good debt, and why?
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  What is an
 example of
good debt and   0
    why?        0
                0
                       The English Empire


 Deficit Spending

      Philosophy of Debt

      • Good debt = student loan.
            -- you make MORE money by incurring the loan!
            (The banker makes a profit, and so do you. It’s win-win)

                                                               Pareto Trade



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                    The English Empire


National Bank
     Deficit Spending
                                                    Apply this to Warfare
      Philosophy of Debt

-- If the war makes your empire significantly more profitable, it
is good to deficit spend




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                    The English Empire


National Bank
     Deficit Spending

      Government Has to Start It

-- The only way to get finance capitalism going is for
government to create a financial system. It doesn’t just happen.
-- England was the first country to realize this: created a
national bank




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England as the First
 Modern Country
England

 -- England is a tiny little island. She was able to build the
 strongest empire on the planet since the days of Rome.
 (let’s look at the map)
                                                     The English Empire




9/13/2012
Note: Some                  Copyright, Sean Wlson. the
             of these possessions arrive later in2007 1800s and early 1900s.   30
                                                   The English Empire




 • strongest empire on the
 planet
 • holdings match that of
 Rome
 • Think of all the places
 that speak English today

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Finance Capitalism

 -- The English invented a new economic model that makes
 the country incredibly resourceful


      Capital                       Corporations


                                          Manufacturing
        Banks
                                Finance

                          Speculation
                     The English Empire


National Bank
     Deficit Spending
-- For the first time in history, England launches the era of
deficit spending (Government running up deficits)
-- How countries went to war before there was a financing
system:
      (tax and confiscate wealth for soldiers; command people to
      fight under pain of death)

-- England learns a new way to go to war: put it on the credit
card
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National Debt –

England invented the idea of creating English-funded national debt. If
you look at government records, England’s national debt actually
begins in the 1690s. It works like a market transaction. If you are a
merchant and you have money, what else are you going to do with it?
You make an investment. You can lend the government money and in
exchange you get an annuity (interest on the loan paid to the lender).
The bonds offered here were at 14% interest. You loan the
government money and then not only get the money back, but make
a profit. The way these bonds worked: if you died, the obligation was
over (there was risk; the average life expectancy was 40 years). Also,
if the government paid the money back early, that was allowed
(analogy: credit card).
National Bank –
England created the Bank of England. It acted as a private bank. It made
loans and received deposits. It was an investment opportunity for
subscribers. It loaned money to the government and in fact would become
the government’s principal lender, and acted as something of a federal
reserve. It could print notes, and that helped to regulate the money supply.
This system allowed England to have 4 million pounds a year in
spending available to them. The British army grew to 76,000 by 1697,
more than double that of James the 2nd. The central administration of the
army would triple in size from about 4,000 to about 12,000 officers
between 1688-1725. The financial revolution has changed England. It is
becoming a wealthy empire with the strongest fighting force. It’s
bureaucracy is starting to become more professionalized. In order to
secure approval for the financial revolution, William had to make
parliamentary concessions. national debt was now permanent and news
was of raising money (budgeting) had to constantly be looked at,
Parliament is now a permanent part of govt.
   New People Become Powerful



Changing of the Financial Guard

Investors became wealthy very fast …. There was a new investor class. It
made a new class of men – “moneyed men.” They were not land owners.
They made money out of money. The old landed-elites saw them as
parasites. They were making money from the land tax which was going
to fund the national debt. And worse, they were making money just from
money. They owned no land yet they were taken into the government’s
counsels.

source – Robert Bucholz (paraphrased)
 Farmers don’t like Bankers

The Bankers are Subjugating the Farmers –

Jonathan Swift, the famous writer, notes that “the country gentlemen are
now at the mercy of the scrivener, who is a lawyer that receives half of the
rents as interest and a mortgage on the whole.” These new practices seem
shady and even conspiratorial. Swift writes, “Through the connivance and
cunning of stockjobbers [brokers], there has been brought in such a
complication of navary and cousinage, such a mystery of iniquity, and such
an unintelligible jargon of terms to involve it in as were never known in any
other age or country of the world.”

source – Robert Bucholz (paraphrased)



  1. The profits of the land pay
  the interest                                  “New Jargon” – farmers
                                                learning the language of
  2. But the loan looms large over              “points” and interest
  the entire land if you cannot pay
Other Benefits of Finance Capitalism

      Manufacturing
            -- is starting to happen in Britain:

            Manufacturing and the industrial revolution had
            started in England in the late 1600s and early 1700s:
                (clothing mills with 1,300 people employed)
                (invention of interchangeable parts)
                (gives Britain an advantage)




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    Other Benefits of Finance Capitalism

            England is a Major Commercial Hub

            -- if you want any sort of consumer goods in the 1700s,
            England is the major player
            -- the trading and financial networks she built were
            unparalleled.
            (Ships, colonies, markets, urbanization, rich culture,
            industry, crafts, artisans, products sailing from here to there
            –- England is at the center of it all).




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Glorious Revolution

     Constitutional Monarchy
            They have a king/Queen, but the Parliament is the
            boss (in theory)
            Significant amount of voting and elections
            Two-party system emerged
            Commitment to individual rights (speech, press)




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The First Modern Country?
Triennial act passed in 1694: requires an election every three years at
least. (But he also said that elections were held 12 times from 1689-1715).
There are more elections in this period than any other period in British
history. Also, there are more contested elections than ever before. Thanks
to inflation, more ordinary Farmers qualified for a vote under the “40
shilling franchise.” IN the local towns, each party tried to increase its
memberships voting roles by manipulating the local charter. So what would
happen is that one party would win and it would go through the borough
charters and add its people. The net result is that you are starting to see
the expansion of the franchise. By 1722, some 330,000 males had the
franchise, which is 5.8 percent of the population, which is maybe a 1/5th or
a quarter of the adult male population. This is by far the largest electorate
in Europe. The English were the first to extend the right to Vote and the
right to say things in print to the citizenry. The right to sack a ruler who
didn’t rule them properly. The rest of Europe thought they were nuts.
Hence the phrase, the rights of Englishmen. You couldn’t say that same
phrase about the rights of a Frenchman or a Russian. England was first.

Source – Robert Bucholz (paraphrased)
The Politics of National
          Debt
Notice How The Idea Operates
                               Borrow




                                            Bank
  Government



                                   Question:
                               How does it pay it
                                    back?
 How does
government
pay it back?   0
               0
               0
Notice How The Idea Operates
                               Borrow




                    Taxes
Notice How The Idea Operates            Time
                               Borrow




                      Taxes

  Trick Question:
Who profits and who
  loses from this
   arrangement?
Who profits or
loses from this
arrangement?      0
                  0
                  0
Notice How The Idea Operates
                                     Borrow




Answer depends upon several things
• Whether it is “good debt” (will pay for
  itself over the long haul)
                     Taxes
• Who is paying for it. Are the rich
  paying more than you to pay it down?
      Jefferson‟s Peculiar Views


attorneys

 J‟s view of attorneys: he grew to
 view attorneys as „lazy parasites
 who subsisted on the malice and
 avarice of others.‟ He also found it to
 be intellectually unfulfilling and too
 repetitive. J left the practice of law
 after 5 years.
                Jefferson‟s Peculiar Views


women

-- has some serious issues with women
-- resented being raised by his mother
after his father died. (She didn’t have
the right to govern him)
-- tell the story of the crush. (Scared to
speak to her; watches for a year)
Time           Jefferson‟s Peculiar Views


women

 -- role of women must be limited

The Role of Women –

Jefferson believed that the central
province of women was the home, and
that they had to be dependent and
subservient to men. "The role of women
is to soothe and calm the minds of their
husbands      returning ruffled    from
political debate."
topic # 55


                      Jefferson‟s Peculiar Views


      race

       -- Warning! – They are disgusting at
       times
       -- racial intermingling would pollute the
       white race
       -- free African Americans could not
       commingle with whites
       (cf. native Americans versus African
       Americans)
                 Jefferson‟s Peculiar Views


race

He notes that people like the Indians do
not suffer from this [inferiority] problem;
Indians simply need to be acculturated. If
native Americans received the benefit of
European culture, they would be ok. But
African Americans can‟t improve. One of
the reasons why he talked about
emancipation was so he could rid VA of
the scourge of Africans who lived there
(that was his real motivation).
               Jefferson‟s Peculiar Views


race

-- in the next passage, note two things
about him
(a) the lyrical way he writes
(b) his intelligence
(c) his terrible, terrible racism

             (warning)
    Jefferson: Slavery is a Learned Evil –

    Alone at his desk where more than 100 slaves labored in the fields
    beyond his window, Jefferson writes, “the whole commerce between
    master and slave is a perpetual exercise of the most boisterous
    passion, the most unremitting despotism on the one part and
    degrading submissions on the other. Our children see this and learn
    to imitate it. The parent storms, the child looks on, catches the
    lineaments of wrath, puts on the same heirs in the circle of smaller
    slaves, gives a loose to his worst passions, and thus nursed,
    educated and daily exercised in tyranny, cannot but be stamped by it
    with odious peculiarities. The man must be a prodigy who can retain
    his manners and morals undepraved by such circumstances.”

    source: David McCullough


                      lyrical prose & depth of the reflection
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   Jefferson: Racism and Inferiority –

   “Their inferiority is not the effect merely of their condition of life. It is
   not their condition but nature which has produced the distinction.”
   Besides the differences in color and hair, he noted, “black people …
   [have] a very strong, disagreeable odor. They were more tolerant of
   heat and less so of cold than whites, more ardent after their female,
   but love seemed with them to be more of an eager desire than a
   tender delicate mixture of sentiment and sensation. Their grief‟s are
   transient, their existence appears to participate more of sensation
   than reflection.”

            racism as a psychological disease                    compare:
                                                                 Nazis attitudes
               bashing perceived or imagined                     toward Jewish
               traits; using those to form a                     features and
               framework to dehumanize                           perceptions 59
3/12/2007                     (C) Copyright Sean Wilson. 2007.
                  Jefferson‟s Peculiar Views


race

   emancipation

     -- never frees one slave
     -- won’t get involved in
     emancipation movements

Emancipation –

When someone wrote him in 1826 to try to get an emancipation
movement going, he basically wrote back, saying that it was not the
right time. The thing that J appears to favor at least in theory is
emancipation with forced deportation to Haiti. He thinks the islands in
the Dominican are made for „these people.‟
                 Jefferson‟s Peculiar Views


race

  emancipation

 -- He is against the Missouri
 Compromise!
 -- strange concept of diffusion
 -- translation: there is too many of
 “these people”
                             Adam’s Reply –
 -- John Adams’ reply
                              “my god, when have you ever seen a
                             cancer that expanded and then
                             evaporated?”
Time           Jefferson‟s Peculiar Views


race

  Sally Hemings

 -- Jefferson has relations with one of
 his slaves
 -- She was of mixed-race ancestry
topic # 58


                         Jefferson‟s Peculiar Views


      What to Make of all of this?

             “presentistic”
       It’s never good to judge someone
       outside of the world in which they were
       birthed
       But we don’t have to do this to criticize   examples:
       him on several grounds
                                                   John Adams
       compared to his elite peers,
       Jefferson’s views on race and other
                                                   George Washington
       matters are quite problematic               Alexander Hamilton
                                                   Ben Franklin
Time             Jefferson‟s Peculiar Views


What to Make of all of this?

    “rock-star defense”
 Jefferson has the mind and
 mannerisms of a troubled artist
 Hit thinks in fits and spurts.
 His numerous contradictions and faults
 are part of his complicated psychology

 You must understand his boisterous passions and troubled
 intellect to make sense of his behaviors

        (I am not of this view; I’m just presenting it)
topic # 57


                               Jefferson‟s Gift


       Poetic Exaggeration

       If there is one industry that Jefferson
       truly has as his own, it is this

             • lyrical way of expressing
             exaggerations
             • he’s the equivalent of great
             songwriters today for his own
             generation (e.g. Dylan)
                        Jefferson‟s Gift


Declaration of Independence

-- lyrical, flowery expression of liberty
with exaggerated prose




Inalienable liberty –

“We hold these truths to be self-evident, that all men are created
equal; that they are endowed by their Creator with certain unalienable
Rights; that among these are Life, Liberty and the pursuit of
Happiness.”
                      Jefferson‟s Gift


Declaration of Independence
-- Not original!
-- The philosophic ideas come from
John Locke
-- And the key phrase, “pursuit of
happiness” comes from George Mason!
Inalienable liberty –the Virginia Constitution –
  George Mason in
“We… the these truths to be self-evident, that all menof acquiring
  “ hold enjoyment of life and liberty, with the means are created
  and that they are endowed by pursuing and obtaining unalienable
equal; possessing property, and their Creator with certain happiness
Rights; that among these are Life, Liberty and the pursuit of
  and safety.”
Happiness.”
Time                   Jefferson‟s Gift


Declaration of Independence
-- Other (similar) declarations made
-- Jefferson’s is the most popular
-- Gather in public to read it
    (entertainment genre)
    (compare: The Beatles)
topic # 59


                            Jefferson‟s Failures


       governor of Virginia

       -- Benedict Arnold and other British
       assaults
       -- doesn’t even call out the militia
       -- the only thing he is good for is hiding
       government valuables and running
       away (they almost caught him)
       -- inquest is made by Virginia          good 1st term President
       legislature, but he is cleared
                                              failure in the 2nd –
       (doesn’t seem to be an especially good
                                              readiness for War of
       commander in chief)
                                              1812
Time                 Jefferson‟s Failures


 finances
-- makes a mess of it
   • crop speculation is poor
   • doesn’t diversify his crops
   • spends lavishly
   • dies terribly in debt
   -- Virginia holds a lottery to retire
   his debts; only pays for a portion of    compare his
   it.                                      library to
                                            Adams’
   -- His library of books is sold to the
   government
           what is coming next




4/8/2010         Copyright, Sean Wilson. 2007.   71

				
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Description: An introduction to Alexander Hamilton, Thomas Jefferson and Colonial America. This lecture sets the stage for the Jefferson-Hamilton dispute, which will be covered in the next lecture. Key to this lecture is an introduction to the psychological complexity of Thomas Jefferson, who is portrayed as someone with rather pronounced intellectual passions, some of which are quite negative and constructed around problematic frameworks.