Is Alexander Hamilton Owed His Ten Spot?

The announcement by Treasury Secretary Jack Lew that Alexander Hamilton’s portrait would be replaced on the $10 bill by that of some suitable woman raised an outcry from those who recognize the orphan from St. Croix’s crucial role in establishing the U.S. federal government.

Hamilton’s defenders are right. The first Secretary of the Treasury was also the most successful one, by far. Hamilton established the nascent federal government’s public credit and the U.S. currency on a sound basis.

If we are to have any public figures other than presidents on our currency, Hamilton has the prime claim, ahead of Benjamin Franklin, who, although he was indeed a very important American thinker, never held top office.

To the more broad-minded, however, Secretary Lew’s announcement simply suggests a number of other changes to the currency that might be made over the next few years, as the U.S. economy develops (or devolves).

Dead Presidents

Among former presidents, the case for Andrew Jackson on the $20 bill is much less compelling than Hamilton’s. Jackson’s economic policy included abolishing the Second Bank of the United States, a direct cause of the Panic of 1837.

While we’re at it, the list of presidents honored on U.S. currency looks distinctly old-fashioned. Where – I ask through gritted teeth – is FDR?

Where – I posit with more enthusiasm – is Ronald Reagan? Where’s Dwight Eisenhower, a better general and a better president than Ulysses S. Grant, who fronts the $50 bill?

My Kind of Lady

As for the potential women to go on the currency, there is but one candidate: Hetty Green (1834-1916). You see, we have no representative of American business success on our currency. And we need one. As Calvin Coolidge said, “The chief business of the American people is business.”

Hetty Green arguably achieved greater eminence commercially than any American woman has yet attained politically. She died not only the richest woman in the United States, but probably about twice as rich as her near-contemporary, financier J. Pierpont Morgan.

What’s more, unlike her fellow Gilded Age plutocrats and many of today’s tycoons, Green didn’t waste her money in conspicuous consumption. Rather, she was a legendary miser, reportedly never turning on the heat or the hot water and eating mostly pies that cost 15 cents.

This, above all, is a lesson modern Americans need to learn. The current U.S. savings rate of around 5% is grossly insufficient either to provide for our old age or to finance small business growth as it should be financed.

“The Spirit of Hetty Green” should be taught in high schools, and putting her image on the currency would reinforce her most important lesson.

Color the Money

As well as women, the U.S. currency should also recognize the achievements of minorities.

An African American representative will surely come with the passing of President Obama; he’ll adorn the possibly virtual currency well before 2100.

Among Hispanics, I propose Juan Ponce de León, who discovered Florida while searching for the Fountain of Youth – both quests dear to aging Baby Boomers today.

As for Native Americans, there can only be one choice. Seyseys, chief of the Canarsee Indians, sold Manhattan to the Dutch in 1626 for goods worth $24 and thus executed the first shrewd real estate deal in American history.

His $24, if invested at the 8.3% then available in Dutch government bonds for the next 389 years, would today be worth $709 trillion, or about 10 times the world GDP.

To merely match the growth of Manhattan real estate – worth approximately $1.2 trillion today – he would have needed an annual return of only 6.5%, a rate that would have been considered derisory in 1626 among the merchants of Amsterdam or London. Maybe we could print a special $24 bill just for him.

Bourbon Democrat, Rock-Ribbed Republican

There is, of course, room for currency expansion among higher dollar denominations, which will become necessary as inflation continues.

The next two honorees above $100, on the $500 and $1,000 bills, are Grover Cleveland and William McKinley, two fiscally responsible presidents whose financial and economic principles would provide more useful lessons for statesmen of the current age.

We should probably extend these honors as soon as possible, as a means of promoting such responsibility among both the political class and the general public.

Weimar Redux

Finally, a special honor should be reserved for Ben Bernanke, who was among the chorus that rose to sing Hamilton’s praises following Lew’s announcement.

The erstwhile Fed chair’s monetary policy – including rapid money creation, negative real interest rates, and indiscriminate purchase of public debts – resembles that of Rudolf von Havenstein, central banker of the hyperinflationary Weimar Republic.

Only Bernanke’s visage could grace the first U.S. trillion-dollar bill, which will fill wheelbarrows to be carried around by a future American populace suffering the long-term effects of this era of easy money.

Good investing,

Martin Hutchinson

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Martin Hutchinson