"Cabinet Battle #1," explained – Vox

Lin-Manuel Miranda’s Broadway musical Hamilton is both a smash hit and a work of genius (he even literally got a genius grant), bringing to life one of the most fascinating and significant characters in American history while also offering a compelling love story and a deep meditation on the nature of historical memory. Inspired by Ron Chernow’s biography and informed by significant research, it’s also a decent Hamilton’s-eye-view history of the founding era.

But one of its iconic tunes — “Cabinet Battle #1” — depicts the argument over one of Hamilton’s most significant legislative initiatives without really explaining its content. In part, that simply reflects the inherent limits of musical theater as a venue for policy analysis. But it’s also the product of artistic choices that reflect Miranda’s larger project. Hamilton is the most prominent element of an even larger ongoing historiographical revolution in the United States — and, given the show’s emphasis on questions of legacy, self-consciously so. A group of scholars, pundits, and artists are reshaping how liberals understand American history and crafting a new usable version of a political tradition that runs from the Federalist Party through to the Whig Party and on to the “radical” faction of the early Republican Party while repudiating the early founders of the Democratic Party.

Like any historical popularization, this requires some flattening of historical detail and nuance. But the particular way in which Hamilton’s Report on the Public Credit is transmogrified into “Cabinet Battle #1” is no coincidence. Miranda gives us a version of the Hamilton-Jefferson showdown that would have been unrecognizable to mid-20th-century audiences, and not just because they are depicted as people of color engaged in a stylized rap battle.

US debt in the early republic

The context for the controversy is that even though the United States had formally won its independence in the 1783 Treaty of Paris, eight years later the country remained saddled with massive wartime debts. Wars are always expensive, and they almost always lead to debt because, given the multigenerational stakes of a major conflict, it would be foolish for a belligerent country to limit its resources to what is available out of current taxes.

Given the essentially nonexistent taxing powers of the Continental Congress, the central government had financed the war through three main expedients: printing money, borrowing from abroad, and requisitioning supplies in exchange for IOU notes. Many soldiers had also received IOUs in lieu of actual salary.

The first of these policies had destroyed the value of continental currency and created a bleak postwar climate for American commerce. And since many of the IOUs were essentially issued on the fly by George Washington and other military commanders rather than authorized by Congress, their actual legal status was in question. Last, the Continental Congress’s lack of taxing powers extended into the postwar era, which made it impossible to pay the foreign debt.

One of the main goals of the new federal Constitution was to redress this situation by creating a central government with fiscal power that would allow it to pay off some of these obligations and put the economy on sound footing. But though the Constitution created a federal taxing power, it did nothing to further specify how this was going to work. At the same time, many state governments had their own wartime debts, many of which were also unpaid.

Hamilton’s plan: redemption and assumption

When the new Congress met, essentially everyone agreed that the federal government would need to start collecting taxes and making payment on the foreign debt. The United States was not a particularly mighty nation at the time, and alienating its foreign creditors was a non-option. In addition, though the United States was rich in agricultural land, by the same token it was relatively undeveloped and needed to import capital from abroad to fuel economic growth. Launching the country’s career with a default on foreign debts would be disastrous.

But as for the domestic debt, there were two issues outstanding.

One was the question of discrimination — who gets paid? Many IOUs that had been originally issued to soldiers or small farmers had later been bought up for cents on the dollar by speculators who were in a position to offer cash money. Hamilton proposed to pay the full face value of IOUs to whoever happened to currently hold them — a position known as redemption that would lay the groundwork for a robust future market in US debt. Many members of Congress favored one or another form of discrimination in payment. Perhaps speculators would receive back what they had actually paid, but the balance of the money would go to the original recipient of the IOU — the person who had actually sacrificed for the war effort.

The other issue was the question of assumption — Hamilton wanted the federal government to bail out the indebted states. He had three basic reasons for this:

  • He thought that creating a federal tax system would be logistically difficult, and he didn’t want state governments competing with him in the scrum for viable revenue sources.
  • He worried that some state governments would either default or adopt discrimination schemes, and this would undermine his aim of creating a robust bond market.
  • He wanted rich and influential people all throughout the country to feel that their economic security was tied to the success of the new federal government, which would incline local elites to support the union and resist centrifugal forces.

To opponents, the combination of redemption and assumption piled unfairness onto unfairness. He was proposing regressive taxes (mostly tariffs and excise taxes) in order to give money to rich speculators. In the case of redemption, he was doing this under the theory that the federal government must uphold its obligations, but in the case of assumption he was saying the federal government must relieve states of their obligations. Either way, the creditors win.

“Cabinet Battle #1” portrays a sectional battle

The ensuing argument pitted Hamilton against Secretary of State Thomas Jefferson and House Speaker James Madison, two Virginians, just as depicted in Miranda’s song.

And as Miranda depicts it, the political conflict had a strong sectional North-versus-South element to it. The Southern states were, in general, not that heavily indebted (South Carolina was an exception), while the speculators disproportionately lived in Northern cities. Hamilton was a New Yorker, and his main antagonists were Virginians.

“If New York’s in debt,” Jefferson raps, “why should Virginia bear it? Our debts are paid, I’m afraid / Don’t tax the South cuz we got it made in the shade.”

This basic conflict of financial interests spills over into a larger debate between the sections and their social models. “In Virginia, we plant seeds in the ground,” argues Hamilton‘s Jefferson. “We create / You just wanna move our money around.”

Hamilton rebuts this with a verse that sounds very persuasive to modern ears:

A civics lesson from a slaver. Hey neighbor

Your debts are paid cuz you don’t pay for labor

“We plant seeds in the South. We create.”

Yeah, keep ranting

We know who’s really doing the planting

Of course, at the time, Hamilton was seeking the support of Washington — himself a slave-owning Virginian. Trying to polarize the argument around the merits of wealth accumulation via finance versus wealth accumulation via the brutal exploitation of black people would have been a badly losing hand. The sectional element of the dispute was very real, but Hamilton’s winning strategy was to try to somewhat downplay the regional issue in favor of arguments for strong property rights and a strong central government — both ideas Washington believed in.

The missing class conflict

Almost entirely missing from Hamilton‘s rendition of the dispute was the heavy class implications of Hamilton’s plan. His scheme, though extraordinarily successful at its main goals of achieving financial stability, also included a hefty dose of reverse Robin Hood — taxing the poor to give to the rich.

Hamilton, an unapologetic elitist, didn’t mind this, and neither did Washington. At the time, voting rights were generally restricted to the more prosperous citizens (specific rules varied by state), and Washington was overwhelmingly popular (see Miranda’s “Washington On Your Side”), so his viewpoint prevailed despite the ugly distributive implications. But as the franchise expanded, the association of Hamilton’s emerging Federalist party with this kind of upward wealth redistribution proved deadly, and Jefferson’s Democratic-Republicans swiftly emerged as the dominant force of the early 19th century.

To a contemporary observer, both sides of the argument over Hamilton’s plan are advancing some good ideas.

Hamilton’s long-term vision of a United States with sound credit and a functioning financial system looks compelling, but his opponents’ critique of the practical economic consequences also seems persuasive. Hamilton was missing two critical elements of the modern policy toolkit — progressive taxes and the welfare state. By our lights, he should have sought out a tax base that would have fallen more heavily on those with the most means (perhaps a wealth tax that would have hit the owners of slave plantations), and he should have created some form of useful social services that could have bound all classes to the new federal government.

Miranda’s version of Hamilton is part of a historiographical revolution

The net impact of Miranda’s rendition of the dispute is to render Hamilton as a more progressive-friendly figure and Jefferson as a more straightforwardly conservative one. Jefferson complains that Hamilton’s text is too long, echoing Republican criticisms of Barack Obama’s key legislative initiatives, and objects generically to taxes — again, sounding like a modern Republican — without raising the point that 18th-century taxes hit the poor more heavily than the rich.

This is part of a larger shift in the trajectory of how American history is understood.

Two generations ago, popular historiography was dominated by the thinking of Arthur Schlesinger Jr., a historian and Kennedy administration aide who produced admiring books titled The Age of Jackson and The Age of Roosevelt. This tradition aligned neatly with the imperatives of the Democratic Party, and emphasized the idea of a continuous tradition of standing up for the little guy, starting with Jefferson, continuing with Andrew Jackson, and moving onward into the administrations of Woodrow Wilson and Franklin Roosevelt and Kennedy. In this historiographical tradition, the little guy is, implicitly, white. The Schlesingerian historiography also struggles with the fact that the two most celebrated American politicians of all time — George Washington and Abraham Lincoln — were both in opposition to the Jefferson-Jackson political tradition.

In the more recent generation, a new historiography has emerged that celebrates not only Washington and Lincoln but also the lesser-known Federalists, Whigs, and Radical Republicans who operated in the same tradition.

  • One can think of this tradition as emerging with Eric Foner’s Reconstruction: America’s Unfinished Revolution, which both reevaluated a specific period in time and also began the process of looking at 19th-century politics through the lenses of race-conscious post–civil rights American liberalism.
  • Daniel Walker Howe’s history of the Jackson era, What Hath God Wrought, essentially projects Foner’s perspective back in time, praising the Whig Party’s progressive views on race and interest in infrastructure spending, counterpoised to Jackson’s racism, small government dogmatism, and crank monetary views.
  • Three popular biographies — the Ron Chernow Hamilton biography that inspired Miranda, Chernow’s biography of Washington, and David McCullough’s biography of John Adamshave brought this new perspective to bear on the founding generation, sowing the seeds of modern American prosperity largely in the vision of the Northern founders rather than the Virginia planter aristocracy.
  • In popular culture, HBO brought McCullough’s Adams to the small screen, and Miranda is turning Chernow’s Hamilton into a cross-platform sensation.
  • In the realm of political punditry, Jonathan Chait recently offered a specifically Howe-inspired take on Barack Obama’s historical role, and Vox’s Dylan Matthews has attempted to project forward into the 20th century to rehabilitate Warren Harding.

The common thread in all of this is to see the comfort with modernity and cultural pluralism that characterizes the Federalist/Whig vision as ultimately more significant than the anti-elitism and small-d democracy of the Jeffersonian one. Washington and Lincoln become this tradition’s great political heroes because they were its most politically successful members, but even those who didn’t manage to make it to the White House (Hamilton or Henry Clay) or who couldn’t get reelected (Adams or John Quincy Adams) made crucial contributions.

Hamilton reveals what divides contemporary Democrats

Miranda’s Hamilton so perfectly matches the sensibilities of mainstream Obama-era Democrats that the Democratic National Committee turned an early November Hamilton performance into a fundraiser.

And it reflects an ongoing, albeit somewhat subtle, split among contemporary Democrats. All factions of the current party are supportive of racial justice causes and immigration reform, and all factions are supportive of making rich people pay higher taxes to finance social spending.

But to someone like Bernie Sanders and his supporters, crushing the political power of the rich is the central political cause of our time — the key from which everything else follows. This worldview is incompatible with both the spirit of high-dollar, star-studded fundraising events (which, indeed, Sanders eschews) and with the idea of celebrating Hamilton and the Hamiltonian tradition in American politics. Not coincidentally, it also has a somewhat strained relationship with some of the racial justice and immigrant rights causes (“the billionaires,” for example, are clearly not the primary impediment to the policing reforms sought by Black Lives Matter nor to obtaining a path to citizenship for millions of undocumented immigrants) that helped inspire the historiographical revisions that are the basis of Miranda’s Hamilton.

But Sanders’s perspective is currently a minority one in the Democratic Party, and the dominant faction that includes both Clintons and Barack Obama offers a distinctly Hamiltonian look for the original party of Jefferson. Yet while less invested in pure class conflict than the more populist wing, mainstream Democrats are still far too wedded to a redistributive agenda to straightforwardly address the full historical Hamilton. “Cabinet Battle #1” gives us a more Obama-friendly Hamilton than history does, nicely demonstrating the overarching significance of who tells your story to determining what stories get told.

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