How Big Finance Won the American Revolution

An Interview with William Hogeland

George Washington and his troops near Fort Cumberland, Maryland, before their march to suppress the Whiskey Rebellion in western Pennsylvania. / Metropolitan Museum of Art


In his latest book, Founding Finance: How Debt, Speculation, Foreclosures, Protests, and Crackdowns Made Us a Nation, William Hogeland argues that America was born less from the fight between the founding fathers and the British Crown, which we’ve all heard about, than from the fight between the founding fathers and American economic populists, which we haven’t heard enough about. The much-ballyhooed conflicts among John Adams, Thomas Jefferson, James Madison, and Alexander Hamilton over the federalist project belie their unity against pro-democratic financial and economic measures that would benefit the indebted masses at the expense of financial elites allied with the founders. That we still fight today over similar issues shows how central they are to our national identity. BR Web Editor David Johnson asked Hogeland about who Herman Husband was, why Robert Morris would feel at home working for Citigroup, and how George Washington would greet the Occupy and Tea Party movements.



David Johnson: How did you come to write the book?

William Hogeland: It comes out of things I had bumped into in my first two books, Whiskey Rebellion and Declaration. I kept coming up against the fact that so many conflicts among Americans during the founding period seemed to be over matters of finance and economics that we’re still fighting over today. I decided that this would be a good time, given the financial crisis and some of the debates of Election 2012 about public debt and private debt, regulation, and so forth, to bring those founding financial issues out very explicitly. So I focused on the founding as a series of conflicts among Americans over finance, if finance can be defined the way my extremely lengthy subtitle defines it: debt, speculation, foreclosures, crackdowns, protests, etc.


DJ: You begin the book with a quote from Edmund Randolph, General Washington’s aide-de-camp and the country’s first Attorney General, speaking to the Constitutional Convention: “Our chief danger arises from the democratic parts of our [state] constitutions.” It should be no surprise to those well-read in American history that our founders were critics of democracy. But you argue that “democracy” in that context means something much more than what we commonly understand. What did Randolph mean by that statement?

WH: When we note, as you just did quite rightly, that the founding fathers were wary of the excesses of democracy, we take it to mean something that’s only partially true—it’s not a full description of what they feared. We think they worried that too much input from too many people might lead to a sort of general instability, possibly mob rule, and so forth. The part we tend to leave out, I think, is the financial and economic dimension. When Randolph was calling the convention to order and saying that what we need to do is form a national government, he was speaking in a specific context of economic and financial turmoil, and everyone else in the room would have known what he was talking about. He meant that the state governments were too weak in resisting the onslaught of democratic approaches to finance, in which the lending classes’ investments would be devalued, laws would be passed by state legislatures to provide what the founders would have seen as excessive debt relief to ordinary people, and a host of other democratic financial policies that the elites of the time, for perfectly cogent reasons, felt would destabilize all good policy. Most people don’t discuss Randolph’s remarks at the constitutional convention, because those remarks are distressing to those who believe in democracy today and wish to connect democratic ideals to the founders.


DJ: Your book not only reconsiders famous figures such as Randolph, Alexander Hamilton, and George Washington, but it also picks up figures that I was unfamiliar with—people we might call “anti-founders.” One of them is Herman Husband, a North Carolina assemblyman who was involved in the 1760s North Carolina Regulator Movement—a populist uprising against wealthy, corrupt colonial officials—and the 1794 Whiskey Rebellion in Western Pennsylvania against federal taxes on distilleries. Why is he important, and why has he been forgotten?

WH: Husband is to me one of the most important and fascinating Americans of the period, but he did not ultimately endorse where the country was going. In the 1790s he became dead set against all the economic and financial policies of the Washington administration and came to great grief in opposing those policies during the Whiskey Rebellion. Husband ended up being imprisoned by George Washington, whom Husband had once admired immensely, and dying of pneumonia contracted while in prison. So his story is far from uplifting in any typical sense, and I think that’s one reason that he and some of the other characters I discuss are less well-known.

Thomas Paine could never see that he and George Washington did not share the same goals.

Husband was committed to what they then called “regulation,” and he meant something like what we mean today by the term, except it was a populist idea of regulation. The immense power of wealth would be “regulated” or restrained by ordinary people. And the rich would have to submit to a government that would actually be interested in equalizing wealth, income, and benefits. It seems like an anachronism to discuss such ideas prevailing in the 1760s and 70s, but actually Husband started working on them in the 50s and 60s. This is much of the burden of my book: you start really looking and you find that things that seem like New Deal ideas, or even socialistic and communist ideas, were alive and well in that period, to the great dismay of most of the famous founders. I think Husband is important because he represents many thousands of people we don’t hear about who had completely different ideas about finance and economics than those embraced by the founders.


DJ: His journey, though, is similar to Thomas Paine’s, whose story is well known. One thing your book suggests is that Husband’s religious beliefs made him a difficult figure for modern progressives to embrace.

WH: One of the things that’s tricky and little-known is that many of the egalitarian, populist democrats of the founding period came to their egalitarianism partly through fervent Christian millennial evangelicalism, which today is more frequently associated with the right wing. Husband is a great representative of the many people in the founding of America whose convictions about fairness and equality and democracy came out of religious experience. Paine is a little different in that way; but I agree that his career is like Husband’s and I pair them in the book, in that their arcs are fairly tragic.


DJ: They both felt betrayed by Washington.

WH: For Paine it was very personal—he was close friends with Washington and felt completely betrayed. It just continues to amaze me that Paine, who was a profoundly intelligent person, could never see, until it was too late, that he and Washington did not share the same goals. Paine couldn’t see it until he was jailed in France and felt abandoned by the U.S. government, which wouldn’t even claim him as a citizen at that point. Husband never met Washington but admired him immensely also, as a hero of democracy and as someone who was going to change the world and restructure the basic terms of society. When Husband got his hands on the U.S. Constitution he had high hopes for it; he knew Washington had been involved in creating it, and he was very excited. But when he read it, he saw, to his horror, that it represented a top-down elitist government. And so he found himself at odds with Washington and ultimately on a short list for arrest that Washington and Hamilton had. He was picked up by Washington’s own troops.

Nothing could have been more disappointing to Paine or Husband, each in his different way. And more importantly, nothing could be more disappointing to the many thousands of ordinary people throughout America they represented who had believed that the revolution would usher a total change in society—financial change, economic change, regulation of wealth, and so forth—and found to their dismay that this was not the case.


DJ: Some of my favorite parts of the book have to do with Robert Morris—the so-called “financier of the American Revolution”—and the creation of the national finance system. You discuss the many sorts of insider deals, conflicts of interests, scheming, and scamming that were involved. These portions of the book reminded me of the CNBC series American Greed: Scams, Scandals and Suckers. I was stunned and dismayed that today’s problems of financial corruption, conflicts of interests, and insider deals were right there from the beginning.

WH: It’s amazing to me that so many of these things that shock and dismay us today when they come to light—exotic, dubious financial instruments, close government connections to financial power, and so forth—were part of founding finance. Frequently people across the political spectrum think, if we could only get back to the basic values of the founding of the country, everything would be better. But the country came into creation largely via Robert Morris’s efforts, which involved absolutely shameless mingling of personal and public wealth, personal and public goals, and so forth. It’s very easy to put Morris down—people put him down at the time; a lot of people were revolted by everything Morris was doing in his own day. But, to me, the most interesting thing is that winning the revolutionary war and forming a nation required what Morris had to offer. Morris had a vision of American high finance, wealth concentration, and national power around the world based on a kind of financial-military-industrial complex, really. Ultimately what we can learn from founding fathers such as Morris has less to do with values we should be getting back to, but the degree to which the values we argue about today are based on the very same divisions prevailing when our nation was founded.


DJ: In the book you’re often critical of appeals people make nowadays to the constitution and the founders in arguing for their favorite policy goals. You show they’re politically charged and often naïve or just wrong. But are such appeals hopeless?

WH: That’s a tricky issue. I ultimately think that we shouldn’t be looking to the founding for principles that we can beat each other over the head with, because that is hopeless. Invoking the constitution has become a way to stop argument; you’re trying to say, well, my point is constitutional and your point is unconstitutional. Then you don’t have to make arguments about economics or policy or finance or about anything else, really, on its merits.

The founding fathers agreed: there’s a popular democratic movement that we have to suppress.

But the hopelessness of that kind of argument does not suggest to me that there’s no hope in ever looking at the constitution or founding history. Everyone will continue to argue about the constitution in the good sense that it needs interpretation and our policies have to be not unconstitutional, and therefore people will argue vociferously about what the constitution allows and does not allow. It’s just that in our debates we’re often just ascribing to the founders some sort of last word on everything, and I think we should look beyond that.


DJ: Chapter 6 is entitled “An Existential Interpretation of the Constitution,” which plays on Charles Beard’s An Economic Interpretation of the Constitution. What did you mean by that title?

WH: Partly I just meant to make a joke about Beard’s title. But by “existential” I meant there are reasons the constitution came into existence that are routinely overlooked, again having to do with finance. Constitutional historians constantly talk about the differences among the people in the convention room—there was the Virginia Plan and the Connecticut Plan and the Jersey Plan— and the various ways they argued back and forth and ultimately worked it into the document we got. Nobody there thought it was perfect, but it was pretty good; that’s the sort of usual description. My book looks instead at why they were there in the first place and what they fundamentally agreed on. It’s my view that they fundamentally agreed on Randolph’s opening remarks—there’s a popular democratic movement that we have to suppress. And I look at certain sections of the constitution that are not very sexy having to do with finance: the prohibition of the states to make anything but silver or gold legal tender, the prohibition against the states to coin their own money, and so forth. On the one hand, it seems obvious that the states shouldn’t have their own money, but that all came about in an economic context that I describe in the book, in which states’ ability to print money and make paper currencies legal tender was devaluing the assets of the elite investing class. Those are the kinds of grittier, less appealing, more realpolitik elements in the document that I’m trying to bring out in that chapter.


DJ: Are there other salient examples from our founding documents that show this history of the founders’ war against economic egalitarianism? I mean, obviously there were the property qualifications, but apart from the obvious?

WH: Well, it’s interesting, the property qualification doesn't really appear in the U.S. constitution, and one of the biggest nationalists and pro-constitutionalists, James Wilson, became a radical elitist, in my view, for actually realizing that changing the property qualification might not be the key to shoring up the stability of the elites and the investing class. But since you raised the property qualification, I’d like to note something that we, again, often forget when we look at democracy and the founding period: there were, in most of the important states, qualifications that prevented people without sufficient property from voting. But the thing that always gets overlooked in that context is that property qualifications were even higher in most places for holding office, so that even if property qualifications were sometimes eased for voting, holding office usually required a greater amount of property. So we can see how all of these mechanisms would tend to privilege elites in government and connect government to wealth. Pennsylvania was radical in 1776 for introducing a constitution that removed property qualifications both for voting and for holding office. For the first time, really, in any meaningful way, you had the ability, at least—it was often still difficult—but the ability, at least for ordinary people, to have a serious voice in government. One of the biggest things the Pennsylvania radicals in government did was to take away Robert Morris’s bank charter. They said it was an elite organization dedicated to enriching the rich and didn’t do anything for the people. One of the very purposes of the federal constitutional convention was to suppress populist efforts like the one in Pennsylvania.


DJ: Crazy ideas like banks that help the people. Speaking of the banks, the Occupy and Tea Party movements, who both took issue with the bank bailouts, have made rhetorical reference to the founders and their supposed values. How might they think differently after reading your book?

WH: When Occupy and the Tea Party reference founding finance, they’re just doing what everyone else does, too: everybody wants to ground their ideas in the basic values of the country, even if those ideas are diametrically opposed to what they advocate. When the Tea Party began, protesters wore three-corner hats and dressed up in 18th century garb. In the Occupy literature I’ve read, there are a number of references to the founding, and “We the People,” and so forth. They, too, seem to be suggesting that if the founders were here today they would be out with Occupy in the street trying to change the relationship between high finance and government. And I think my research suggests precisely the reverse.

Now that doesn’t mean there was nobody out in the street during the founding period trying to correct the relationship between high finance and government. There were people like Herman Husband, and thousands of people he represented, and the regulators and the militia privates, and so forth that I talk about in the book. But the famous founders themselves would not be the friends of Occupy. The question is whether there is something for those movements to get out of the founding period.

The Tea Party and Occupy activists would find George Washington there with a club, trying to lock them up.

What ultimately is the real lesson? Herman Husband makes a difficult hero, as does Thomas Paine. They were far from pragmatic; they were visionary. Paine was a hyper-rationalist but, in another way, he could be quite extreme in his fervency about really changing the fundamental bases of society. I think Occupy has roots in the earliest moments of the founding period and that’s one of the things I want to bring out—but, if they followed those strands back to their origins, they would not find George Washington supporting them. Rather, they would find George Washington there with a club, trying to lock them up; they would be on Herman Husband’s side. And then the question becomes: how much do you want to embrace Herman Husband? That’s a question for everybody today. We’ve ignored Herman Husband partly because he’s so difficult to embrace. But maybe if we could embrace some of that extreme, utopian vision in the most radically democratic elements of our founding—the very things George Washington was trying to shut down—we might have something to learn from them.


DJ: You have some harsh words in the book for those you call the “consensus historians”—people such as David McCullough and Ron Chernow who’ve written major best sellers on the founding fathers. What are the worst misconceptions we get from reading their works?

WH: In Chapter 5 I devote some space to positioning myself in full opposition to what I call the consensus approach to history; I’m pulling a lot of historians into it. One of the groups I take issue with are the popular biographers of the founding fathers genre that’s been popular for the past 20 years now. I think they have a tendency to write these warts-and-all hagiographies. It’s not cool to portray people as saints—it’s neither believable nor credible—so there’s a lot of “humanizing” of the founders. But even with all their human flaws included, these biographies frequently overlook or deny what the subjects actually did.

Many are perfectly well-written, well-researched, engaging books. But their failure to me is that they don’t give us the people they’re talking about. Hamilton made no bones about many of the things he did that Chernow tries to whitewash or whisk out of sight or otherwise decline to let us see clearly. I think that’s a problem. Now I certainly don’t intend to beat up on “popular history.” I consider myself to be working, largely, in a pop vein: I’m not trying to write abstruse academic history. I’m not a credentialed academic historian, and I’m happy not to be, because I think not being one has allowed me to see things more clearly than I would otherwise. So I’m not criticizing popularity per se or accessibility per se. I spend much of that chapter actually criticizing academics historians, among the most credentialed and influential academic historians of our time—Gordon Wood, Richard Hofstadter, Edmond Morgan. I criticize them for influencing the pop historians to such a degree that the things that I want to talk about have been left out of the story, not just in the popular world but in the most influential parts of the academic world as well.


DJ: Right now, as we speak, everyone is counting down the days to the fiscal cliff. We’re debating a “grand bargain” on the budget, whether we should cut entitlements, and whose taxes we should raise. What reverberations in your research do you see in today’s debates on our finances?

WH: I’ve been very struck for some time by the way the debate shakes down in relation to the founding era of finance. Grover Norquist and his crew, people who self-define as “constitutional conservatives,” are constantly invoking the constitution as if it were holy writ that taxes must be low or non-existent, that public debt must be low, that government must be small, and so forth. On the contrary, as the book shows quite clearly, the country came into existence very specifically to create a large and powerful government to fund a public debt via national, federal taxation. I’ve always been struck by the flat-out contradictions of the Grover-Norquist-types calling themselves constitutional conservatives when their positions are basically anti-federalist—the last gasp of anti-federalism.

In terms of how to move forward toward making some bargains, I think it would great if some of the founding father and constitutional rhetoric were left out of it. The historians I criticize most thoroughly in Founding Finance, the ones who have overlooked and marginalized the things I'm trying to talk about, the consensus I’m targeting—it's largely liberal. It’s very hard for me to imagine anyone on the liberal side of politics getting realistic about founding values when it comes to money and economics, because the values of the famous founders are so much more elitist than it would be politically expedient to admit. Really any argument that gets into basic American values over finance and economics is bound to be contradicted by the real historical narrative. I would really prefer that they stop talking about history.


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About the Author

William Hogeland is author of Founding Finance, Declaration, The Whiskey Rebellion, and Inventing American History.

David V. Johnson is Web Editor of Boston Review.

William Hogeland,
Founding Fathers, Founding Villains
Inventing Alexander Hamilton
Constitutional Conventions
Real Americans

Barbara Clark Smith,
Revolutionary Consent (archive)