Students of American history find it remarkable how struggles of the founding days continue to repeat themselves down through the decades and centuries.  That is because so many of the founding disputes were based on differing views of human nature, and human nature seems to change very little.

Currently, we are locked yet again in one of our recurring half-century battles over the size of banks.  In this case, size matters because size equals power.  Here again we see Thomas Jefferson and Alexander Hamilton head-to-head.  Hamilton wanted a very large and powerful national bank, and banking system, to foster large-scale investment, economic expansion, and competition with older European systems.  Jefferson opposed this scheme because he anticipated the inordinate political power such concentrated wealth would have within the democratic process.

Jefferson saw a handful of bankers controlling vast economic power, encouraging speculation, manipulating investments and currency values, and warping the political process to its own ends.  He knew that money equaled power and that it distorted political systems, including republican ones, throughout history.  What a surprise!

Yet, here we are now, two and a quarter centuries later, and, though Jefferson was clearly right, Hamilton has won…yet again.  Now the few giant banks, combinations of traditional banking and rampant, largely unregulated speculation, not only too big to fail–and thus guaranteed against collapse by everyday taxpayers–but also too big to be brought under public regulation.  An army of lobbyists, upwards of 1,500 or more, many former members of Congress and their families, swarming the halls of the peoples’ Congress, warning of apocalypse if they are required to be transparent, even with public money, protecting astronomical bonuses (distributed as a nose-thumbing thank you to those of us who bailed them out), and trading campaign contributions for influence.

Expecting the predictable tut-tutting about how I’ve traded my chance for statesmanship for populist ranting, my response is: Jefferson, once again, was right, and I’m proud to be on his side.

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34 Responses to ““The Only Surprises Are the History We Do Not Know” (Harry Truman)”

  1. John Walsh Says:

    The 21st Century version of” banking ” serves no purpose. It does not allocate capital for economic growth but only generates fees for unrestricted gambling with other peoples money, and it is interconnected internationally with all the ramifications that that entails. Caveat emptor will not suffice.
    Synthetic Collateral Debt Obligations and Naked Credit Default Swaps structured in the Cayman Islands do not constitute ” God’s Work ” and the Democratic party needs to quit sharing bed covers with Republicans and stop these dangerous abuses in the finnacial sector.

  2. Jeff Simpson Says:

    One of the principal limitations of our present political system is that there are only two major parties with a virtual lock on power, and so major lobbying efforts can fund campaigns on both sides of the aisle and come out at least ok with the outcome of every election. Chris Dodd (D) and Richard Shelby (R) are, by at least some reports, likely exploring at this early stage a bipartisan approach, and, because Shelby is expected to be kind to Wall Street, this is seen as an indicator that the final legislative product may fail to sufficiently protect us from large banks, opaque financial relationships, synthetic CDOs, and the general gaming of the system by the big players at the expense of everyone else. Barney Frank and Obama are both counseling Dodd to abstain from engaging Shelby at this point — presumably counting on an inexorable, populist-fueled rage to propel whatever product is ultimately made on to become law.

    But the weakness versus the strength hangs in the balance of what Dodd decides to do. If the bill does get watered down and another financial crisis does occur, historians may not be kind to Dodd. It is better to call attention to this important matter now, when it matters more. Speaking important truths should never take a back seat to political expediency, and of any true stateman we should expect nothing less.

  3. Debbie Lackowitz Says:

    Read your post Mr. Hart. And I too am on the side of Jefferson (not Hamilton). As history has shown us, Mr. Jefferson was right, Hamilton was wrong. Now what to do? It does seem cyclical doesn’t it? But as President Obama said, this is OUR time. WE must deal with this, and make it work. For US!

  4. Dick Fisher Says:

    Senator, I’m surprised you didn’t give Harry Truman credit for that great line, which he phrased as, “The only thing new in this world is the history you don’t know.” I’m 78, and I haven’t heard anything new — especially from a Republican — in a long, long time.

  5. Gary Hart Says:

    Mr. Fisher: I do credit Truman, but you have the correct wording and I do not. I was operating from memory, and I’m only a few years younger than you. Many thanks.

  6. Byron Souder Says:

    There is a degree of irony in the fact that it was Hamilton who began the idea of the national debt. Not only did Hamilton fail to foresee how out of hand the greed of the banking industry could get, but also what the nation would do with the idea of piling on deficit after deficit. Now it is today’s “Federalist” Hamiltonians who fear what is being accumulated, seemingly unaware that you cannot partake of just one element of Hamilton’s scheme.

  7. Neal Taslitz, Esq. Says:

    With all due respect to Mr. Fisher, Senator Hart did in fact credit Harry Truman for the statement, immediately following the statement.
    Bankers and others that believe they are too big to fail would be well advised to revisit American history with respect to the unfortunate demise of Alexander Hamilton, who died in a duel with Aaron Burr in 1804 over personal and political differences.
    I do not believe that Mr. Hamilton thought he was invincible, but as a result of his desire to push his politics and ideology at any cost, he obviously overplayed his hand and paid the ultimate price.
    Even though Mr. Hamilton did not want to be in the duel with Mr. Burr, he felt he had no other choice, since his power would have been weakened by not accepting the challenge.
    Unfortunately the “dueling” with lobbyists, and their financial clients against the populist form of Jefferson’s view of democracy, that most in the financial industry despise, is likely to end poorly for those who refuse to allow proper regulations.
    An industry that has turned many banking and finance institutions into giant casinos, bent on bankrupting everyone except themselves, is highly likely to devour itself in the end, without proper government regulations.
    The foundation of trust that is fundamental in any business/client relationship will eventually be lost if the financial industry continues “business as usual” without making very serious changes to the practices and management that created the fine mess that has weakened our trust in them. Without trust, who will the industry get to invest in their future?
    Not even Laurel and Hardy would invest 5 fins in the huge financial institutions of today, unless they make the needed changes to protect their investors, and the taxpayers.

  8. Kat Says:

    And you, Gary Hart, are right again too. I find you to be a reasonable, inciteful and erudite writer. I have always found comfort in your words and I wish there were more like you in office. In fact, I wish you were in office, representing the people.

  9. Kat Says:

    Of course I meant insightful!

  10. Clarc King Says:

    Hamilton created the First National Bank in order (a)to cement the states into a nation by assuming responsibility for their respective debts at the end of the Revolutionary War, (b)to facilitate the creation of a national economy, (c)to counterattack and free the United States from the British East India organized monetary system. His creation was excellent. The argument between the philosophical differences of Jefferson and Hamilton were genuine, however are misleading the public now.
    The Federal Reserve and the Wall St. cabal do not operate as/under a U.S. National Bank organization, but has facilitated the operation of the international monetary system; the British East India company, through the back door.

    Hamilton: ” It is by introducing order into our finances, by restoring public credit, not by winning battles, that we are finally to gain our object”. Congress today, moves as instructed by Adam Smith, watching the hand of God and Goldman Sachs perform their several economy killing machinations upon the United States with U.S. financial resources.

    The United States is supposed to be a super power not subject to the authority of an Imperial power; but we are. Congress can not discern irregular financial warfare?

    Congress and the Administration must implement economy formation measures now,or this great nation is doomed.

    Statecraft demands the termination of the monetary system: put the Fed into bankruptcy protection, recover the bailout trillions banks that qualify will join the U.S. National Bank under Glass-steagall standards. assert the national authority and create the long-term debt capital that refinances industry. Counteract the market forces that demand the expansion of depredations on the population; foreclosures, unemployment, bankruptcies, hunger, homelessness, etc. credits and currencies shall be issued into the populations physical economy and create the necessary facilities that enhance our standard of living. The attendant job mobilization and infrastructure projects will activate actual economic recovery.

    Congress must get its’ act together, they are becoming dangerous to the population. They must implement economy formation measures that will facilitate the national economy or this great nation is doomed.

  11. Dick Wolfe Says:

    Mr. Hart, congratulations for setting the record straight and refuting the cult of Hamilton.

    Byron, I think Hamilton knew exactly how out of hand the banking industry could get and was comfortable with it. He was a true believer in the rule of the wealthy few and that money and power were the true symbols of worthiness.

  12. William Says:

    This reminded me of a LTE I sent last year.

    To the editor:

    During Franklin Roosevelt’s 1936 campaign stump speech, he said, “We had to struggle with the old enemies of peace — business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering.

    They had begun to consider the government of the United States as a mere appendage to their own affairs. We know now that government by organized money is just as dangerous as government by organized mob.”

    It’s interesting the way history keeps repeating itself. Roosevelt didn’t realize how fast the collective memory fades. Ronald Reagan ran on the opposite philosophy, saying that government had to get out of the way of those forces so they could “lift all boats.” He claimed that he “didn’t leave the Democratic Party; the Democratic Party left him.”

    That’s the sort of delusion that enveloped the former president and which has infected our nation culminating in the financial collapse of 2008. Since Reagan, the forces of greed have worked all their magic.

    Harry Truman quipped, “The future is the history you don’t know.” And ironically, Alan Greenspan recently said, “It would be foolish to think that sometime in the future, we won’t be having these same conversations again.”

    Dale Anderson, Bloomington

  13. Caroline Says:

    This isn’t quite fair to Hamilton. He wanted a US equivalent to the Bank of England. Other countries have national banks; the Germans have Deutsche Bank, etc. Of a bank founded by Aaron Burr (now Chase Manhattan), Hamilton remarked disapprovingly that “in its principles” it was “a perfect monster.”

    When a friend tried to get him to buy some land on the cheap, Hamilton wrote him, “I don’t want to be rich, and if I cannot live in luxury in the city, I will live in comfort in the country and be content.”

    TJ was rich. He was a wealthy slaveholder whose extravagances put him into debt; after his death his slaves were sold on the yards of Monticello along with the farm equipment (source, NY Review of Books). AH, by contrast, was an opponent of slavery (see Lincoln’s Cooper Union speech) who as a young officer tried to persuade Congress to give slaves “their freedom with their muskets” (to fight in the Continental Army). In this and many other respects, AH was more enlightened than TJ. (See my newly published article online at the Journal of American Studies, Cambridge UP).

  14. Tenoha Templeton Says:

    Mr. Hart,

    You are absolutely correct…and why we cannot learn from history is beyond me. Keep up the good work, many support your ideals!

  15. Stephen Luftschein Says:

    What a simplistic view. If Jefferson was “right” and Hamilton “wrong” and yet it was Hamilton’s views that prevailed, doesn’t the (former) economic might of the US serve as fair proof of Hamilton’s views.

    A more accurate read might be that Jefferson’s warnings about Hamilton’s ideas, and the unfettered promulgation of Hamilton’s taken to it’s extreme, were correct.

    As to Americans not understanding history, well, the continued existence of the “progressives” points to that. Let’s see, Depressions in 1914, 1920 and 27 all as the direct result of progressive economic policies. FDR’s policies causing the extension of the US depression almost 5 years longer than the rest of the world. Eugenics, the RE-segregation of the Army and Federal government, internment camps, court packing, and this doesn’t include the horrors that we are witnessing today.

    Please, let’s read history, real history.

    Hamilton wanted a national bank, and he was correct in that. Jefferson warned of the accumulation of too much capital, and power, in any one hand, or hands, and he was correct in that.

    We can learn much from both.

  16. Byron Souder Says:

    To Dick Wolfe: The old game of history, “If we could bring him back to life…” might be played here, to no satisfying end, of course. My belief is that even Hamilton, championing the “better sort” and with his own concerns with social class would be horrified to see the mess that has been made of what he began in good faith–an economic system designed to see the states cemented in something more than that “firm league of friendship” and to see the nacent US survive the European wolves. In the Federalist Papers we see how the writers saw the need for power to meet power, or as they put it, faction to meet faction. Today there are no factions–the money is all on one side, the table has been run and even rough parity is a wisp of a dream. I do not think that Hamilton would agree with that.

  17. Thomas Rush Says:

    Senator Hart, I agree with your purpose here. But as student of American History I have to give Hamilton and his ideas some credit for establishing the infant nation’s economy on sound footing. Jefferson was a huge land and slave owner intent on protecting his own interests and those of his ilk. He lived on his mountain top like a European lord. His actions, both public and private, often did not live up to his retoric, and his intent was often masked by his words. There is much to admire about Thomas Jefferson, but he is not above being questioned. George Washington certainly came down on Hamiltons side, and Jefferson himself often applied Hamiltonian methods to his own principles. Hamilton’s programs were absolutely vital to creating an independent nation was a growing economy.

    Later we see the same issues, albeit in a slightly different form, being fought over by Andrew Jackson and Henry Clay. I think I better understand now Jackson’s views and purpose after what we have recently experienced in the financial meltdown. But Jackson’s actions against the banks were often in the extreme and can be sighted as a major cause of the depression that plagued American in the late 1830’s and through out most of the 1840’s. In opposing the power of the United States Bank Jackson basically destroyed the country’s credit and currency, much to the deteriment of the average person. And Clay’s view ultimately would prevail in the economic policies of Lincoln.

    I personally feel it was FDR who got it right. The people must be protected. There is a public interest that always needs to be served. But we also must not kill the nation’s ability to grow and prosper in business. As a small time investor I want to profit and gain my independence for a comfortable retirement. And as a small time investor I don’t want my hard earned money be stolen away by unregulated shysters intent on lining their own pockets with my cash. We must strive to find a balance here, and I suspect that balance exists somewhere between Hamilton and Jefferson. We need to reign in the banksters, but we must be careful not to ruin our ability to prosper and spread opportunity and prosperity for all.

  18. Mark DiMassimo Says:

    Senator Hart,

    When you say that Jefferson was right, I don’t think that you are being quite fair. It seems to have been amply demonstrated that he was right in his fears, but this does not necessitate the conclusion that his side of the argument with Hamilton was wholly right and Hamilton’s completely wrong.

    In fact, a conclusion more in keeping with your opening premise would, I think, be more true. The argument is a recurring, perhaps even eternal, one because there is human truth on both sides. There is much to fear from having too large, too powerful banks, but equally much to fear from having too small, too weak banks. The same can be truly said about the perennial argument about the size of government.

    These are arguments, therefore, that can not be settled for all time. A new balance must be worked out by each successive generation. Each will of necessity weigh the risk of internal concentrations of power against internal and external threats and interests.

    The cartoon stereotypes of Hamilton and Jefferson serve modern prejudices and partisan interests, but these are far from the reality of the men or their lives. The world they inhabited, fed by one-crop slave islands and southern plantations with the average life considerably more brutish and short than ours today is thankfully gone, not least due to advances in finance that are poorly understood by most.

    Recognizing the truth on both sides seems to make bad entertainment, bad ratings, and bad partisan politics in Washington D.C. But it also seems to be making a lot of Independents.

  19. Gary Hart Says:

    I must remind Clarc King that every member of Congress received, in many cases in multiple elections, a majority of votes from his or her constituents. The same polls showing widespread public unhappiness and anger at Congress also show that most people are happy with THEIR member of Congress. Congress is not a body that fell from the sky. It is made up of elected representatives. It is within the power of voters to turn out members of Congress. Unfortunately, most people want to keep their member of Congress and turn out all the others.

  20. Peter Phippen Says:

    Funny how we are still discovering ‘new’ bits of history from 200 years ago, when the last ten years is still staring us in the face, but we are not choosing to see it. The effects of two wars of aggression, Afghanistan and Iraq, continue to drain away our valuable resources and sap our strength and resolve the Founders built into our Constitution and Declaration of Independence. Never before in the history of this country, has so much effort been expended on denying the imputus to war. We are clearly in denial, and blind to the truth that we are ‘doing this to ourselves!!’ The tragic events of September 11, 2001 have never been fully understood, though it is the sole reason and purpose behind the majority of our foriegn and domestic policies. By not fully understanding the depth and breadth of what really happened on 9/11 we risk losing the entire ‘war’ for knowledge and understanding, that is always the true purpose of one country’s power over another. The purposeful demolition of the World Trade Center towers by nano-thermite and other very high-tech explosives is beyond refute. Why this was done, has yet to be revealed, though as a smoking gun, it points to the policies in the middle east, the world and at home. Until we are willing as a country to really look clearly at that ‘day of infamy’, we will continue to fight the wrong enemy. Our real enemy is ‘greed’ and lust for ‘power over’. These enemies will continue to ‘win’ as long as we abdicate our rights as citizens of a free democratic republic. We must question that which all of our decisions are based on. Mustn’t we?

  21. Gary Hart Says:

    I thank all those who have contributed more subtle interpretations of founding history than I did. The blog is a great invention, but not for extended or elaborate discussion, including of history. I am very aware of the complexities of both Hamiltonian and Jeffersonian philosophies, and backgrounds, but chose, too briefly, to highlight one difference that is relevant today. Of course, we needed (and need) a large-scale financial system as a large power. The political issue is whether that system, in the hands of too few, then exerts excessive, unfair, and unjust political influence. That is what Jefferson feared and he was correct in his fears.

  22. David Cook Says:

    Here’s what strikes me about this history. First, I think Hamilton’s “victory”, which was really because George Washington bought into it, was what the new nation badly needed to strengthen itself in its new incarnation. Now in the 21st Century, with time to see how well capitalism feeds on greed and the downside of that, the historical irony to me is that Jefferson gave birth to the anti-government ethos in our country. Regulation is “tyranny”. Jefferson may have rightly perceived the risks of accumulated wealth to the country, but he didn’t seem to understand that it was government who could reign it in for the “common good” or turn it loose for the good of the few.

  23. Bette S Baysinger Says:

    Money is a tool, don’t let it make you one.
    BS Baysinger

  24. Bette S Baysinger Says:

    Since 1913 with the creation of the Federal Reserve Bank and fractional lending most of the money has been virtual. It only exists as data we are being fed by the Feds; 97% of US money is electronic only, digital even. The new skin color is your credit score which is based on how well you handle your virtual money, how well you play the debt game, and which side you are on. The Federal Reserve Bank, a pseudo private (or pseudo government, I can never remember which) and virtual money that only exists as data the bulk of which belongs to those behind the Federal Reserve Bank since 1913 to NOW is the history WE NEED TO KNOW, please, and thank you in advance.

  25. Alex Says:

    As others have pointed out, its quite unfair to liken the current situation on Wall Street to Hamilton’s ideals. Hamilton believed firmly in sound finance and never speculated in the stock market himself. He also helped create America’s economy from nothing and left it with the best credit rating in the world. In contrast, if Jefferson had his way, we’d probably all be farmers… we certainly wouldn’t be writing internet blogs in the most technologically advanced country in the world!

  26. Gary Hart Says:

    In response to Ms. Baysinger I would like to be able to dazzle with a 150 word disquisition on the Federal Reserve System, virtual money, and digital credit. Unfortunately, I cannot because, for a philosopher/public servant, it is a great mystery, one meant to be kept away from us mere mortals.

  27. Gary Hart Says:

    Inciteful or insightful, either way I appreciate the kind words, Kat.

  28. Gary Hart Says:

    In response to Alex, may I point out my clarification of 27 April narrowing the point of the blog to the issue of undue political influence by a small group of financiers, which was Jefferson’s concern, and I would also point out that Jefferson had one of the finest scientific minds of his generation and perhaps his age. He would flourish in today’s technological world.

  29. Tomas Says:

    Aside from Senator Hart’s insightfulness, for which I am always grateful, he has many times incited me, along with many others, to action. I think of 1972 and 1984 in particular.

  30. Tom O'Neill Says:

    Gary: Your heart may be in the right place, but you’re pretty wrong on Hamilton. Hamilton believed firmly that government should control the nation’s finances. It was Hamilton who staunchly said the most un-Republican thing imaginable: “That government which cannot tax cannot govern.” He meant to bind the financial elite of his time to the service of government. It didn’t work; but that’s what he intended. I’m not sure you’ve gotten Jefferson right, either. Jefferson, we know, believed in liberty; he believed in his liberty to have an runaway slave whipped lest that slave’s liberty interfere with his own liberty to sit in the shade at Monticello and meditate at leisure on the rights of man. Democrats have too long gloried in being the children of Jefferson. They should long ago have handed him over to the Republicans–with whom he belongs.

  31. Gary Hart Says:

    In response to Mr. O’Neill’s instruction, I will, once again, reiterate the point of the original blog, which was not intended as a lengthy lecture on the political or economic philosophies or the personal histories of the two founders, but rather to point out the concern Jefferson had for the political power concentrated wealth, in the form of a few banks and bankers, would have on our system of government. I am quite familiar with Thomas Jefferson, his life, and his political beliefs.

  32. Tom O'Neill Says:

    I think, Gary, you let yourself off a little easy. You twice say: “Jefferson was clearly right.” Let me propose the counter thesis that Jefferson was clearly wrong. For the sake of popularity, if nothing else, he clearly promoted as President the manufacturing which he had damned when Hamilton was promoting it. The problem was his laissez-faire approach to government would let him sponsor manufacturing (and the companies that engaged in it) but blinded him to the necessity (well understood by Hamilton–whom you do say was wrong) to have a government sufficiently robust to control it in the public interest. Jefferson, you see, did not really believe in liberty; he believed in privilege. That Democrats espouse liberty in their rhetoric but seek in their acts the privileges of the Republicans is the great liability of Democrats. If they (you among them) could think through their thoughts on Jefferson, we’d be in better shape. As is, we’ve got a “Republicrat” in the White House.

  33. Jim Cox Says:

    Man, I miss you in the Senate. My political awakening came in the dark days of Reagan/Chernobyl/Challenger. For the first time, I really understood the profound ideological differences that shape our nation. I also started to understand the individual personalities involved and the threads that they continue to pull today.(Cheney = shudder)
    Every election cycle, I put together my dream team of who I wish was in the administration. You are always on the list, as well as Sen. Nunn, Al Gore, Gen. Clark, and others. Pres. Obama was handed the wheel of the Titanic about 30 seconds before impact. If he calls in 2012, please step up again. Your human failings (like Jefferson and many other wise heads)pale in comparison to recent others and to the challenges my children have unfortunately inherited.
    Thank you for your service and wisdom.

  34. Jim Cox Says:

    One more thing: listening to George Harrison sing “with every mistake we must surely be learning”. My sad conclusion is “no we are not.”

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