Public Forum

"The year was 1792, and Wall Street had just experienced its first crash, for which William Duer and a secret circle of New York grandees were mainly to blame. They had conspired to speculate on the bonds just issued by the newly created federal government. Soon they found themselves deeply overcommitted and forced to liquidate their holdings, causing the fledgling market to collapse and its manipulators to flee-in Duer's case to debtors' prison; for the more fortunate among them to safer havens out of state."

"Hamilton was a Revolutionary War hero and a founding father. But by the 1790s, he was also the man most widely suspected of harboring elitist sentiments dangerous to the democratic aspirations of the new nation. During the Constitutional debates he had argued on behalf of a lifetime presidency and imagined the Senate as a kind of House of Lords. In his capacity as President George Washington's secretary of the treasury, he had devised a plan for funding the national debt that had accumulated during the war and in the years afterward. The federal government would sell its own bonds to make good on the nearly worthless securities issued by the states and the Continental Congress during the Revolution. Hamilton assumed that the purchasers of these new securities would be merchants, bankers, and others of substantial means. By acquiring these bonds they would help establish the creditworthiness of the new nation. In turn, that would, Hamilton hypothesized, attract capital from home and abroad which would jump-start the commercial and industrial development of what was, after all, an underdeveloped country."

“As the Democratic-Republicans saw it, this was a plot to establish a financial aristocracy like the one ensconced in England. Looking across the ocean they could easily see how an incestuous relationship between the money men and the central government (in England, the monarchy; in America, presumably, the executive branch) threatened to make the government the exclusive preserve of the privileged. The great executive powers of France and Great Britain, so the anti-monarchists believed, floated on a vast sea of public debt. That funded debt had in turn engendered big banking institutions, well-oiled markets for money, new forms of investment, and a whole new class that traded in public securities. An alliance between this moneyed class and the Crown had overawed independent sources of political authority. According to Jefferson the real sin in Hamilton's design was that it would "prepare the way for a change from the present republican form of government to that of a monarchy of which the English constitution is to be the model"

"Jefferson and his allies were not against trade. But they envisioned an agrarian republic, not a commercial one, made up of independent middling farmers trading with Europe only for those necessities not produced at home. In this way the new nation would be immunized against the infection of urban luxury and squalor, the war of class against class, and the moral rot that they felt characterized the Old World. "

"All through the 1790s, publicists, pamphleteers, and politicians warned about bankers and speculators fattening on the public credit. Even President Washington, who in the end favored Hamilton's strategy, worried, and he queried the treasury secretary: Would not the new capital ultimately pose a threat to republican government by "a corrupt squadron of paper dealers"? Hamilton's plan was a bonanza for such people, an unholy alliance of aristocracy and money. These speculators had bought up the securities issued by the states and the Continental Congress at rock-bottom prices from their original holders: desperate veterans, farmers, and other ordinary folk. Under Hamilton's scheme these rich bond buyers could now redeem their once worthless paper at its full face value."

A Long View of Wall Street http://www.npr.org/templates/story/story.php?storyId=95241895

In our third century our plight is even worse today as bankers and paper dealers (Goldman Sachs) have taken control of our government and we can't afford to buy it back.

Max Keiser on Superstitious Trading

http://www.youtube.com/watch?v=LGK4_ItBORc&feature=youtu.be