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" Philadelphia was a cosmopolitan city, praised by a highborn British visitor as “one of the wonders of the world,” “the first town in America,” and one that “bids fair to rival almost any in Europe.” 27 Larger than either New York or Boston, it supported ten newspapers and thirty bookshops. Largely through the civic imagination of Benjamin Franklin, it boasted an astounding panoply of cultural and civic institutions, including two theaters, a subscription library, a volunteer fire company, and a hospital. As "
― Ron Chernow , Alexander Hamilton
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" James, sixteen, and Alexander, fourteen, were now left alone, largely friendless and penniless. At every step in their rootless, topsy-turvy existence, they had been surrounded by failed, broken, embittered people. Their short lives had been shadowed by a stupefying sequence of bankruptcies, marital separations, deaths, scandals, and disinheritance. Such repeated shocks must have stripped Alexander Hamilton of any sense that life was fair, that he existed in a benign universe, or that he could ever count on help from anyone. That this abominable childhood produced such a strong, productive, self-reliant human being—that this fatherless adolescent could have ended up a founding father of a country he had not yet even seen—seems little short of miraculous. "
― Ron Chernow , Alexander Hamilton
198
" Hamilton argued that the security of liberty and property were inseparable and that governments should honor their debts because contracts formed the basis of public and private morality: “States, like individuals, who observe their engagements are respected and trusted, while the reverse is the fate of those who pursue an opposite conduct.”23 The proper handling of government debt would permit America to borrow at affordable interest rates and would also act as a tonic to the economy. Used as loan collateral, government bonds could function as money—and it was the scarcity of money, Hamilton observed, that had crippled the economy and resulted in severe deflation in the value of land. America was a young country rich in opportunity. It lacked only liquid capital, and government debt could supply that gaping deficiency. The secret of managing government debt was to fund it properly by setting aside revenues at regular intervals to service interest and pay off principal. Hamilton refuted charges that his funding scheme would feed speculation. Quite the contrary: if investors knew for sure that government bonds would be paid off, the prices would not fluctuate wildly, depriving speculators of opportunities to exploit. What mattered was that people trusted the government to make good on repayment: “In nothing are appearances of greater moment than in whatever regards credit. Opinion is the soul of it and this is affected by appearances as well as realities.”24 Hamilton intuited that public relations and confidence building were to be the special burdens of every future treasury secretary. "
― Ron Chernow , Alexander Hamilton
199
" How exactly the debt should be funded was to be the most inflammatory political issue. During the Revolution, many affluent citizens had invested in bonds, and many war veterans had been paid with IOUs that then plummeted in price under the confederation. In many cases, these upright patriots, either needing cash or convinced they would never be repaid, had sold their securities to speculators for as little as fifteen cents on the dollar. Under the influence of his funding scheme, with government repayment guaranteed, Hamilton expected these bonds to soar from their depressed levels and regain their full face value. This pleasing prospect, however, presented a political quandary. If the bonds appreciated, should speculators pocket the windfall? Or should the money go to the original holders—many of them brave soldiers—who had sold their depressed government paper years earlier? The answer to this perplexing question, Hamilton knew, would define the future character of American capital markets. Doubtless taking a deep breath, he wrote that “after the most mature reflection” about whether to reward original holders and punish current speculators, he had decided against this approach as “ruinous to public credit.”25 The problem was partly that such “discrimination” in favor of former debt holders was unworkable. The government would have to track them down, ascertain their sale prices, then trace all intermediate investors who had held the debt before it was bought by the current owners—an administrative nightmare. Hamilton could have left it at that, ducking the political issue and taking refuge in technical jargon. Instead, he shifted the terms of the debate. He said that the first holders were not simply noble victims, nor were the current buyers simply predatory speculators. The original investors had gotten cash when they wanted it and had shown little faith in the country’s future. Speculators, meanwhile, had hazarded their money and should be rewarded for the risk. In this manner, Hamilton stole the moral high ground from opponents and established the legal and moral basis for securities trading in America: the notion that securities are freely transferable and that buyers assume all rights to profit or loss in transactions. The knowledge that government could not interfere retroactively with a financial transaction was so vital, Hamilton thought, as to outweigh any short-term expediency. To establish the concept of the “security of transfer,” Hamilton was willing, if necessary, to reward mercenary scoundrels and penalize patriotic citizens. With this huge gamble, Hamilton laid the foundations for America’s future financial preeminence. "
― Ron Chernow , Alexander Hamilton
