Alexander Hamilton: How a Caribbean Orphan Built America

0:00David McWilliams: Today's podcast is all about Alexander Hamilton. The question I'm going to pose is, the Americans are celebrating their 250th year of the republic this week. Would America be the place it has become without the intervention and the genes of Alexander Hamilton? That's all coming up in a couple of minutes. Still waiting in line? Again? That's time you will never get back. Save time and money with Stamps.com. Over 4 million businesses have skipped the line with Stamps.com. Join them to save up to 90 % off carrier rates from your computer or phone right now. Print postage for certified mail, registered mail, and packages in seconds.

0:45Then schedule a pickup right from your home or office. For a limited time, go to Stamps.com and use code PODCAST for a free welcome gift. Taxes and fees apply. We all belong. outside. We're drawn to nature. It calls to us. Whether it's the recorded sounds of the ocean we doze off to, or the succulents that adorn our homes, nature makes all of our lives richer, calmer, and frankly, better. Despite all this, we often go about our busy lives removed from it. But the outdoors is closer than we realize. With AllTrails, you can discover trails nearby or trails worth traveling to and explore confidently with offline maps and on-trail navigation.

1:35Whether you're looking for a laid-back walk with family or something more adventurous to get your heart pumping, AllTrails gives you the tools you need to get out there and find your outside. Download the free app today and make the most of your summer with AllTrails.

1:58To understand the economy, you have to understand human nature. This podcast is powered by Acast.

2:10David McWilliams: How you doing there? Time for the podcast. If you are in the United States, you're probably nursing a little bit of a hangover on the back of the 4th of July celebrations. These ones being the big one, because it's the 250th anniversary of the Declaration of the American Republic, 1776, 4th of July. We're going to talk about the man who I believe was the most consequential of the founding fathers. You don't hear a huge amount about him, and that is Alexander Hamilton, the man who was responsible for the dollar, the man who was responsible for the American banking system, the man who was responsible for putting the American Republic on a secure financial footing, of which the American economy grew, grew and grew in the early part of the 19th century, attracting in, as we know, an enormous amount of both people and capital from Europe, fusing together to create, by the end of the 19th century, the economic behemoth that is the United States.

3:13David McWilliams: John, how's your plasma? My plasma is grand. How's yours? I'll tell you, dear listener, poor old John was in a hospital yesterday. I was. He's kind of Messi-esque in his sporting prowess. Indeed. Everybody says that. Pirouetting around five defenders unopposed. And he's had an ankle injury for quite some time, just kept him on the sidelines, much to the distress of the national football team. And you got plasma injected into your ankle yesterday, man. Yeah, yeah. You know that treatment that they do? They were kind of saying, ah, it's a bit of a lost cause. That I fell off a wall, actually, and bust my ankle.

3:52So it hasn't healed properly. So they said, okay, I'll tell you what we'll do. We'll take some of your blood. We'll spin it round like mad. We'll separate the plasma and the red blood cells and we'll jab it back in the plasma part. So that's what happened to me yesterday. And Jesus is it sore. And you were roaring in an embarrassing fashion. I was a hooting and a hollering, roaring the place down.

4:15David McWilliams: Yes, dear listeners, as you know, John is incapable of deceit and pretending that something doesn't hurt. So you were like a young fella in the hospital. Yeah, yeah, yeah. It was a bit like back in the day. Do you remember going to the hospital? You brought me to the hospital several times. One time with a hook stuck in my head. And Jesus, I screamed that day as well. As you were cutting out of me. As you know, John and I have known each other for far too long. And our entire childhood was characterized by John falling off things, getting the hook stuck in his head, falling, you know, literally up apple trees, falling down.

4:54David McWilliams: He was the shittest fellow to rob an orchard. The shittest fellow to rob an orchard. I was a shite skateboarder as well. He was discreet. You were a terrible skateboarder. But very good at curbs. Good at curbs, yeah, yeah. You had an eye for the curbs. Okay, let us talk today, John, about the extraordinary character that is Alexander Hamilton. Because, and I think the contrast between Hamilton and the founding fathers and the present incumbent in the White House doesn't even have to be reiterated. Because on the one hand, you had these very farsighted, very idealistic, rarely corrupt, and unbelievably committed to the American project.

5:34Okay, and the project of the new nation. and today you have, let's say,

5:39David McWilliams: a rather tattered version of that in the White House. And John, you may, just so you get your antenna up, Donald Trump is going to visit Ireland. He has said he's going to come to the Irish Open, which is in Doonbeg, his golf club. And that's between the 9th and the 13th of September. So he'll arrive probably for one day and it'll be a photo op, the Irish diplomacy. It'll be a very long day, Mac. It'll be a long day for you, John. to be a very long day for you. But given what we know about Donald Trump, a round of golf at his golf course is worth five St. Patrick's Day shamrocks in the White House.

6:18David McWilliams: Because that's the sort of person he is. He's like a big child. Yeah, it's true. I think, in fairness to Irish diplomacy, I think it actually works, you know? You kind of hold your nose, and he comes over, he has a good time, he talks to Rory McIlroy, he talks to Shane Lowry, he watches the golf, he says it's beautiful, and then he fecks off and we're done. I mean, that would be the best case scenario though, Mac, in fairness, because during that very long day that he's here, he could be firing off all sorts of verbal missiles and abuse and stuff. Who knows? So keep your heads down. He will be.

6:54David McWilliams: He will be. Yeah, no, it's a diplomacy has, it's like when you forgot to do your Ecker in school, John, right? And the teacher comes in and you know that the teacher's going to pick out five lads, right? And you've got your head down and you're at the back and you're hoping to Jesus that he doesn't come close to you. Yeah, exactly. That's exactly what our diplomacy is. It's third year, secondary school, homework not done, Monday morning type diplomacy. Keep your head down. Cold sweat diplomacy. Yeah, exactly. And hope to Christ that somebody gets snared and then away you go. Yeah. That's it. That's it.

7:31David McWilliams: Anyway, the reason I want to talk about Alexander Hamilton, John, is because Alexander Hamilton was the man who created the dollar. When I say created the dollar, as Brendan Greedy told us a couple of months ago, it's not that he created the dollar, but he adopted the dollar as the currency of the United States. And from there, a huge amount of American economic growth flows. And I think he doesn't get the accolades that lots of the other guys get. The other fascinating thing about Hamilton, of course, is that he was murdered. He was the former Treasury Secretary, and he was murdered by the sitting vice president in 1804.

8:13I mean, it's mad, isn't it? I know, I shouldn't be laughing at that, but I mean, that's like J.D. Vance taking out Scott Besant. Now, that's something I'd like to see.

8:22David McWilliams: You're absolutely right. You're absolutely right. We'll talk about this in a little bit. Yeah. It was a duel. There was an affair. There was sex. Rock and roll, drugs, maybe not drugs and rock and roll. There was sex, there was money, there was all sorts of stuff involved. There was jealousy, there were enmities, there was deep, deep resentment. And a guy called Aaron Burr, who was the vice president, had a duel with Alexander Hamilton and killed him. And do you know what the reaction of the rest of the cabinet was, for instance? What did the president say? What did the... Look, there was a duel that Burr challenged Hamilton.

9:00David McWilliams: Hamilton took up the challenge, but it was assumed, John, that both men would aim to miss and that honor would be satisfied and they'd move on. Burr decided to kill Hamilton because he hated him. Because Hamilton was a much more influential, intelligent, charming, charismatic man. And Burr was one of these unbelievably aggressive career politicians who hated Hamilton's kind of swagger. And we'll talk about that in a little while, but the issue here is on the 4th of July, 1776, when the new republic was declared and when the Americans kicked the British out, there was nothing there. The American economy was destroyed after the War of Independence.

9:46The states were fighting over who would finance what, what the general lie of the land would be.

9:52David McWilliams: The currency at the time was called the continental. We've talked about this before, not worth the continental, is the American expression for something not being worth anything. The reason is the American currency in the aftermath of the war was, first of all, it was inflated away during the war because the American rebels had no money, had no access to capital because everyone thought the British would win because Britain was the biggest empire in the world at the time. People were absolutely shocked that the Americans won. They were the Cape Verde of the time. They were the Cape Verde of the time.

10:23David McWilliams: That's a very good analogy. And we will stretch it by saying... Hamilton was the Pico Lopez of the whole gig. That's a bit of a stretch, but let's come back to that. But Hamilton understood that all this talk about the Declaration of Human Rights and la la la was all very well, but the economy needed a currency to stabilize. The reason this is that Hamilton had a very, very different view, John, on what the United States wanted or what he wanted the United States to become. And he was at loggerheads with the other founding fathers, of which he was a original member of the founding fathers, but he had a very different view.

11:02Yeah, he seemed to be the man with the vision compared to the other lads. But when you were saying earlier there that he's also one of the guys who is less spoken about or seems to be less spoken about than the other founding fathers, it is interesting that there aren't any big cities or there are no states named after him. Very, very true. Very, very true. There's a bunch of Hamilton cities, but they're not big as far as I know. There's no capital cities.

11:30David McWilliams: Well, do you know, John, that in the late 1780s, there was a movement in New York City to rename New York City Hamiltonia. So unbelievably popular was he at that time because he was the man who actually wrote the Federalist Papers. I'll tell you all about that in a second, but let's get a sense of who he was. Alexander Hamilton was born in the island of Nevis, in the Caribbean. His Scottish trading father abandoned him and his mother when he was an infant. His mother was a French Huguenot, and she died when Hamilton was 11. So he was an orphan. He was originally French speaking. He didn't speak English as his first language.

12:14He spoke French as his first language. He was so brilliant in primary school, Nevis, that friends of the family decided that they would pay for his education in New York. And he goes to university in New York. And not only that, but Hamilton rose unbelievably quickly in the American revolutionary circles.

12:40David McWilliams: He fought alongside George Washington. He played a critical role at the Battle of Yorktown. And more importantly, he was Washington's translator from French because again, the two big powers in North America were the French and the British. and he was translating everything that the French were saying to the Americans. And of course, the French supported the Americans not because they wanted an American republic per se, but the French crown wanted the Brits to be beaten in North America. So it was kind of my enemy's enemy is my friend idea. And Hamilton was the translator. Is that how he got so close to the powers that be in Washington and the like, through his translation skills?

13:21David McWilliams: Well, it was translations. He was like the Jose Mourinho of the American Revolution. Because Jose Mourinho, you remember, was the translator for Bobby Robson at Barcelona. That's how he actually got his break. Right. People forget that. Jose Mourinho's first job was the translator from English to Spanish. Right. Despite being Portuguese, or because he was Portuguese. So now we've the Pico Lopez, the Jose Mourinho, there's a Portuguese theme here. But anyway, let's go back to it. You know, he was a general in the American Revolutionary Army. He was an amazing fighter. More importantly, he was an orator, and he was a writer, and he was a strategic thinker.

13:55Now, the interesting thing is that like all rebellions, what happens, as we say in Ireland, is the first thing on the agenda of a post-revolutionary meeting is always the split. That always happens in Ireland, always happens in Irish revolutionaries. Exactly the same in the American revolutionaries, John, because Hamilton had this, he was a complete modernist. And he had a view that America was going to be a capitalist country, was going to compete with the Europeans, and it was going to be a financial hub. So his idea was that this huge country could become a world leader. That was his idea.

14:36David McWilliams: Now, Thomas Jefferson had a completely different view. Number one, Thomas Jefferson was an anti-federalist. He wanted states to be unbelievably powerful. That's the first thing. Himself and James Madison and Samuel Adams, those three who were always spoken about as the leaders of the revolution, along with George Washington, they had this kind of a primitive view of economics. They thought that America could be this rural, Arcadian, independent, separate, uninvolved republic that would grow on the basis of small homesteads, small farmers, and that it would ultimately earn its back on the industrial revolution that was at the time galvanizing certainly Britain.

15:22So interestingly, Jefferson's view was a sort of homespun America that would be between these two great oceans and wouldn't involve itself, would be an isolationist one, and it wouldn't involve itself in the world. And it would be very rural and simple. A kind of a green and pleasant land kind of thing. But that's a very De Valera-esque kind of approach to economics and agriculture and the whole lot. Yeah, I mean, it was very much like De Valera. So De Valera's... What we forget is that De Valera's main impulse was cultural. That he wanted us to be an Irish-speaking isolated and in his eyes, pure country.

16:08And of course he changed. He changed over the years, but that was his original impetus. Jefferson was exactly the same. So their idea was the revolution. Jefferson's idea was the revolution wasn't just about independence. It was about articulating and constructing an entirely different United States, absolutely different to Britain and the rest of Europe. Hamilton, on the other hand, maybe because he was French-speaking, he was more cosmopolitan. He'd been brought up in the Caribbean, which is actually a very cosmopolitan part of the world. It's hard to believe now, but the Caribbean was incredibly cosmopolitan in those days with English, Spanish, and French used interchangeably.

16:47Lots of people coming and going, all that sort of stuff. So Hamilton's idea was, no, what we will do is we will create an economic juggernaut here. And that economic juggernaut will eventually challenge the Europeans. And he, because he said, his idea was that if we don't, as Americans, come up with an

17:06David McWilliams: economy that's stronger than Britain, do you know what's going to happen? They're going to try and colonize us again. So think about in the same way as the founding fathers of the Irish Republic were obsessed by England, right? That was their absolute obsession for at least a generation. the Americans were the same. They were obsessed by English. And they were obsessed by the English crown and the fact that the Brits were coming via Canada and trying to take them over again, et cetera, et cetera, et cetera. So Hamlet was saying that the only way we can ensure the longevity of the revolution and the permanence of the new republic is by having an economy that works.

17:40So how did he set about doing this, setting up this modern America, you know, in the face of Jefferson's Agarian America?

17:48David McWilliams: Well, this is the amazing thing. It involves whiskey, John. Oh, good. It involves a whiskey rebellion, but I'll tell you about that in two seconds. There's three major points in the Hamilton story. First, he was driven by the fact that he wanted America to be a federation. And that means that the states had power, but ultimately the central government was the major power. And that at the time was very, very novel. because a lot of the American revolutionists wanted the states, each individual state to just remain almost like a sovereign country. Yeah, yeah, yeah. So the United States of America is a Hamilton idea.

18:30The second thing is he wanted to create a powerful central government. And the way he did this was, one, he said we need a powerful currency that people can identify with. It's going to be Alexander the Great idea, that the currency is more than just a piece of paper. It's a unifying force. And he said, we need to bring the states to heel. We need to find a moment where we can supercharge the primacy of the American state over the states.

19:06David McWilliams: And they got their opportunity, John, in a whiskey rebellion. Explain that one now. So for a nation of Puritans, The Americans drink a hell of a lot. We know that. And they love hard liquor. So in 1791, Hamilton, as Treasury Secretary, did what all finance ministers do at a budget. They taxed the old reliables. They taxed booze. It's fags and booze here now. Yeah, yeah. Then it was booze, right? So he said, the one thing we know about these rebels is they all drink heavily. So we're going to tax booze. And we're going to tax booze. and we're going to start by taxing the booze of Pennsylvania because Pennsylvania was one of the most populated states at the time.

19:50Yeah, a hotbed of whiskey drinkers.

19:52David McWilliams: It was a hotbed of whiskey drinkers, but pot still whiskey makers, John. Right, okay. So you imagine all these lads making bourbon out in the outback. Yeah, yeah, yeah. Kind of with shotguns, bourbon, and the 17th century equivalent of a pickup truck, okay, and a baseball cap, right? So basically this is the MAGA movement, right? this is the origins of the MAGA movement. They're in Pennsylvania. And I told you before that Pennsylvania was described by the raging Cajun. You remember your man Carvel? Yes. Yeah. When he said that Pennsylvania in political terms is Pittsburgh on one end, Philadelphia on the other, and Alabama in the middle.

20:28David McWilliams: So basically it's a rural state. Yeah. So these guys say, no, we're not paying the tax. In fact, you know what? The original American rebellion in 1776 was over taxation. The Brits wanted to tax the colonists. So these guys, these sort of good old boys in Pennsylvania said, there's no way we're going to do this. We're a new country. You can't tax our booze. And so George Washington was going to negotiate with them. Because George Washington at this stage was absolutely convinced that he needed to keep the people together after the revolution. But Hamilton said, no, this is our opportunity to send in the feds, to send in the American army.

21:05Ice. And crush the rebellion, right? And it was Hamilton said to Washington, unless you face these guys down, this will be the beginning of the end of the revolution because you need central control. And what you need to do is you need to send in the feds, right? You need to send in the federal army and establish the primacy of the American army over these militia. Because basically it was a whiskey-driven militia that actually was going to do the fighting. And they kind of said to Washington, come and have a go if you think you're hard enough in effect. And Hamilton said, okay, let's go in. So once he did that, that sent a signal to all the other states that hold on a

21:47David McWilliams: second. If you mess with the feds, the feds are going to come in and crush you. So that was the first thing that was completely new. Then he said, okay, what we need now is we need a new currency because he said Hamilton's idea was, and this is the essential economic genius of the man. He said that without stable currency, the revolution will be still born. Without a finance system, without a banking system, without something for people to believe in financially, we will actually go backwards and the Brits will come and recolonize us. Where was he getting his kind of vision from? Where was his inspiration?

22:25How did he kind of know this stuff? Because this is incredibly new. It's a new departure in politics in general.

22:33David McWilliams: Yeah, very interesting question. So Hamilton was very friendly with Talleyrand. You know, our French guy. Yeah. In fact, Talleyrand said of Hamilton. So Talleyrand was a man who knew everybody. This is the chancer, the spoofer, the hustler, the guy who was on the king's side. Then he was a bishop. Then he robbed the land of the church. Then he went for Napoleon. He went against Napoleon. He betrayed Napoleon. But Talleyrand said of Hamilton. I consider Napoleon Fox, who was a British liberal politician, Tom Gagel, Charles Fox, and Hamilton to be the three greatest men of our epoch. And if I was forced to decide between the three, I would give, without hesitation, the first place to Hamilton.

23:13David McWilliams: Right. High praise indeed. Yeah. And again, Talleyrand had worked with Napoleon, he'd worked with the king, he'd worked with everybody. He ended up being the French ambassador to Britain. I mean, this is a guy who knew all the greats, right? That's the first thing. You ask where he got ideas. It seems to me that he was very, very aware of what was happening in France at the time. So if you think about the French Revolution went from being a sort of a bourgeois uprising of lawyers and teachers and thinkers and intellectuals and business people who wanted the French monarchy to reform, it flipped very, very quickly into a Jacobin guillotine-fused kind of blood fest, very, very quickly.

23:57And what Hamilton saw was a part of that story was hyperinflation, was that the French revolutionaries began to print money hand over fist to pay for the war. And this precipitated chaos all around. Hamilton saw what was going on in France in the early 1790s and said, look, we can't do that. That's the first thing. The second thing, I think, comes from his Caribbean background. So the Caribbean was ultimately, although, and we talked about the slave trading, etc. But it was also, on top of that, a highly, highly commercial mercantile area based on trade, based on sugar, based on cotton, based later on coffee.

24:38And it was a hotbed of European commercial activity. And I think that Hamilton, more so than the other revolutionaries, was infused with this commercial sense. Yeah, he could see the potential of it. and his upbringing,

24:54David McWilliams: he could see the potential. He also could see if you don't play this game, you're going to become impoverished. And if you become impoverished, your revolution will become imperiled. So I think that's what's going on in the Hamilton's mind. But he was unbelievably savvy. He was the only economic thinker of the revolution. And he was also incredibly charming. So the first thing we see, 10 years after the English leaving, it's not until 1787 that the Constitutional Convention is called in Philadelphia, where Franklin and Washington and all those big wigs come and they sit down and say, well, what are we going to do?

25:30What is the Constitution going to be? And as I said, there was this huge gap between people who wanted no central government and only state government, and people like Hamilton that wanted central government to create the United States, the United States of America. and they'd be united in one overall government, which would be in Washington, right? Right. First thing is that this constitutional convention had to be ratified by all the various states. There had to be a vote on it. So somebody had to become the main proponent of the constitution and somebody had to try and travel around the states galvanizing people to vote for it.

26:17And what Hamilton understood was that the way you do this was through the newspapers, through editorials and newspapers. That's the way you get to people. So Hamilton, the orator, the general, turns into Hamilton, the journalist. Right. Yeah, yeah. In October of 1787, he published the first of these essays on the Constitution, which became known as the Federalist Papers, which were the bedrock of, or the main influencer of the American Constitution. It was, this was the way in which Hamilton was going to get the people to vote for this Constitution. Right, yeah.

26:57David McWilliams: Amazingly, it was 85 articles in the Federalist Papers, right? 51 of those articles were written by Alexander Hamilton. 29 were written by James Madison, and five were written by John Jay. So they're the three of the founding fathers there, right? Hamilton was by far the most influential of all of them. Okay, and he carried the day. So first of all, he established the constitution. And then he said, okay, once we do this, we have a revolution, then we have a constitution. Now we've got to do our currency. But before we do our currency, what we've got to do is we've got to face down any of the rebels.

27:32David McWilliams: We take the opportunity of the whiskey rebels. We send a message out to everybody, don't mess with the feds, okay? And then he turns his attention to coins, coinage, and the dollar. And that's the story of the dollar starts with Hamilton. Okay, Mac, hang on there. Hold that thought, as they say. Let's come back and tell me the story of the dollar after a libation break.

28:04Still waiting in line? Again? That's time you'll never get back. Save time and money with Stamps.com. Over 4 million businesses have skipped the line with Stamps.com. Join them to save up to 90 % off carrier rates from your computer or phone right now. Print postage for certified mail, registered mail, and packages in seconds. Then schedule a pickup right from your home or office. For a limited time, go to Stamps.com and use code PODCAST for a free welcome gift. Taxes and fees apply. We all belong. outside. We're drawn to nature. It calls to us. Whether it's the recorded sounds of the ocean we doze off to, or the succulents that adorn our homes, nature makes all of our lives richer, calmer, and frankly, better.

28:57Despite all this, we often go about our busy lives removed from it. But the outdoors is closer than we realize. With AllTrails, you can discover trails nearby or trails worth traveling to and explore confidently with offline maps and on-trail navigation. Whether you're looking for a laid-back walk with family or something more adventurous to get your heart pumping, AllTrails gives you the tools you need to get out there and find your outside. Download the free app today and make the most of your summer with AllTrails.

30:08So, Mark, Hamilton is the main guy in town here, and we've set up the constitution. We've put down the whiskey revolution. We've done all the kind of groundwork. Now the focus is on the currency to gel everything together. So tell us the story about the dollar, its inception, and how it came about. How was it adopted? So very, very briefly, the dollar had been in circulation in Europe. A thing called the dollar was from Jakimsthaler. Remember we talked about that before? Yes, yeah, yeah. It was called the thaler. It was a silver currency based in what is now the Sudetenland or was the Sudetenland in the Czech Republic around Karlovy Vary, that part of the world in the Czech Republic now.

30:52Those silver coins were very much in circulation everywhere. They were called thalers in Europe

30:59David McWilliams: and the Americans call them dollars, right? Which is basically the American accent not being able to, or not wanting to pronounce the TH. They call them dollars, right? Yeah. That's the first thing. The second thing is the most powerful currency at the time was the Spanish real, which was a Spanish silver coin. And they also had a Spanish gold coin. And Hamilton realized that if a new currency was to work in America, it had to be tied to something really credible. So they tied the dollar to the Spanish silver coin. But because the Spanish silver coin was called the real, which means royal in Spanish, these American revolutionaries couldn't countenance the idea of calling their dollar the real because they were anti-monarchist as well.

31:48So they adopted the German word dollar for the currency. Okay. And on the 2nd of April, 1792, Hamilton passed the Coinage Act, which made all this stuff legal. And this is the beginning of the story of American finance. Because not only did he, when he was Treasury Secretary, establish the dollar, he also did something that most revolutionaries didn't do. He said, look, we have an enormous amount of debt that all the states have incurred in order to fight the revolution, right? What are we going to do with this? Most of the revolutionaries said we should default on all our international obligations and start again, go to zero.

32:35Hamilton said, if we do that, we will incur the wrath of the capital markets in London. And the problem for that, if we do that, the risk is that what we will do is we'll lock ourselves out of the capital markets. We need capital. We don't have any capital. And he actually did the opposite. Hamilton went to the Brits and the French, who were the major creditors, and he said, we're going to pay you back every single cent that we owe you over the next 50 years. And in so doing, he reassured all these creditors that by doing business in America, the government would never, ever, ever undermine capitalism.

33:14One idea, and he said, we will issue debt, we will issue long-term in debt. We'll pay back everybody money we owe. We won't default on anybody, even though they are actually our enemies, the British. And what we will do is we will create a very, very deep capital market in the United States, which he did. So are you telling me, Mac, that from the very inception of the United States of America, 250 years ago, they were in debt from day one?

33:43David McWilliams: They were completely in debt. In debt to themselves and in debt to foreigners. Right. And of course... Start as he means to go on then. Well, exactly. Exactly. You see, what happened was, of course, the British took all their money out of America the minute the War of Independence was lost. The French were the only people lending to the Americans, but the French also went from being a stable monarchy in the 1780s to being a revolutionary power in the 1790s. So Hamilton was aware of all this, and he was thinking, look, if we follow down the road of default, what we will do is we will send a signal to everybody that we can't be trusted.

34:25He's saying, rather than do that, what we should do is we should issue long-term federal debt. We should take all the state debt. This is a really interesting thing. We should take all the debts of Pennsylvania and New York and Massachusetts. And he said, rather than penalize each state, we put it all together in one big pool and we will issue a federal debt, which is governed by the United States of America, the government. And this was, again, a huge move that nobody had figured out beforehand. And this, of course, established the Americans as an alternative place for money to come looking for a home.

35:04Now, this is crucially important to appreciate that in the first 20 years of the 19th century, so from 1800 to 1820, in effect, Europe was locked in a civil war between the French revolutionaries under Napoleon and the old monarchies led by Prussia, Britain, and Austria. They were the huge enemies of Napoleon because they were monarchies. So Europe was completely divided in these Napoleonic wars. It was war after war, battle after battle, etc. So it was basically like an intellectual civil war within Europe. America was isolated. So European capital was looking for a home. Hamilton understood, look, if this is going to be the case and we provide a kind of a safe haven for European money, it'll come to us.

35:56And he was absolutely right. And the extraordinary thing about America was that by 1830, 30 years really, 40 years after the establishment of the dollar, American GDP per head had surpassed Britain's. And Britain was the richest country in the world. And it wasn't like Britain of today. This was Britain of the empire. This was Britain of the Industrial Revolution. This was the workshop of the world. American GDP per head surpassed the Brits by 1830, which is an amazing feat. That's incredible. Yeah. It is incredible.

36:31David McWilliams: It is incredible. And there's a guy called Alexis de Tocqueville, John, who was a French journalist, in effect, a writer. who went around America and wrote about America, incredibly, incredibly canny, incisive, very, very deep thinker, right? And he was trying to explain to a French audience what the hell is going on in this new country, America. What he really understood was that Americans were obsessed by money. And he couldn't get his head around this. And he says, and here's the quote, As one digs deeper into the national character of the Americans, one sees that they have sought to value everything in this world only in the answer to this single question, how much money will it bring in?

37:13So what de Tocqueville noticed there was the Americans were particularly obsessed by making money. And he called money the new religion of the new republic, right? That's what de Tocqueville said. And he was right. Absolutely, Mac. I mean, and to this day, I mean, Trump as an example, epitomizes that. Yeah. I mean, Americans are money obsessed. It's a society that is driven by the acquisition of possessions and the acquisition of money and wealth. And it's glittering and it's tacky and

37:45David McWilliams: it's bawdy and it's amazing and it's innovative and it's everything at the one time. You know, it's a nation full of contradictions. But what is fascinating, we'll probably leave it here, John, is that the man who established this, who gave them the platform was Alexander Hamilton. None of the other founding fathers were thinking like he was. And then finally, you know the amazing thing, John? Go on. He's murdered. Yeah, I mean, that's so bizarre, isn't it? It's such a bizarre story, that. So we're talking about we're in the late 1790s here, John. Now, Hamilton, like all politicians who are really brilliant, they have supporters and enemies in equal measure because there's always jealousy, right?

38:24And there's always people like, who is this kind of orphan boy, French-speaking originally, now American. You know, who is this guy, number one? And number two, how do I take him down? Because I want his gig, right? That's always the way in politics, right? There's nothing more sinister, Machiavellian and mandatious than a cabinet table. They all hate each other because they're all going up the greasy pole. Hamilton might have understood that the Americans were interested in money, but he actually got one thing wrong. Hamilton was French in his outlook. And as you know, the more affairs a French politician has,

39:03David McWilliams: the longer their career, right? Yeah, yeah, yeah. Whereas... It comes with the job, doesn't it? It's part of the job, yeah. Exactly. You have to have a couple of mistresses, right? But in America, they were puritanical about this, right? They still are kind of puritanical about sex, you know? So, Hamilton had an affair with a woman whose husband, right? This is a lovely little detail. Whose husband was aware of the affair and decided to bribe Hamilton. So he said, yes, you can be with my missus, but I'm going to extract money from you to do that. Wow. Was the missus in on this conspiracy as well then?

39:43David McWilliams: Missus was in on this. So basically his langar got him into trouble, right? Oh my God. She was a woman called Maria Reynolds. This is like Dallas and Dynasty all wrapped up together. Yeah, yeah, yeah. It's a great story. Maria Reynolds was her name. She was married. Reynolds' husband, who was aware of the relationship, decided that he'd keep it going by blackmailing Hamilton. And of course, then Hamilton's ambition to get to the highest office in the land was compromised by this affair. This affair then came out in public. Hamilton denied it first, and then said, yes, it is happening. And there was all sorts of scurrilous articles written about him, okay?

40:24One of the persons who really wanted to capitalize on the downfall of Hamilton was a guy called Aaron Burr who was the vice president. And Aaron Burr was a nasty, nasty ambitious creature. And Hamilton responded because Hamilton was always very good with the pen. Hamilton responded in the press by slagging your man Burr back

40:48David McWilliams: after Hamilton had got slagged. and Burr, rather than doing what everyone does when things are written about you in the press, the most responsible thing to do is never respond. You have to walk away because it'll be yesterday's news tomorrow, right? This is the Twitter of the time. A Twitter spat at the time. This is the Twitter of the time, exactly. But Burr decided, no, I want my pound of flesh. I got to demand a jewel. I have been slighted. And in the jewel, Burr, on the 7th of July, 1804, the jewel was in New Jersey and Burr shot Hamilton and killed him. And that's how the most important, most brilliant, most economically savvy member of the Founding Fathers came to his death.

41:36He was murdered by one of his own, which is a classic American story. Yeah, yeah, yeah. There we have it.

41:43David McWilliams: Talk to you Thursday.

42:05We'll see you next time.

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