MORE HAMILTONIAN THAN HAMILTON?

 MORE HAMILTONIAN THAN HAMILTON?
In the 1790s there was a major debate between the followers of Thomas Jefferson, who wished to keep the powers of the new federal government to those strictly enumerated in the Constitution, and those of Alexander Hamilton, who wished to interpret the "necessary and proper" power of Congress broadly. The particular issue then was whether Congress could charter a bank as "necessary and proper." As it happened, Congress did charter a bank and the power was eventually upheld in McCullough v. Maryland (1819), one of John Marshall’s famous Supreme Court decisions, the one that said the power to tax involves the power to destroy.
Federal power expanded greatly during and after the Civil War, when Hamilton’s views were not much mentioned, and during and after the Great Depression, when they were. In U.S. v. Butler (1935) the Supreme Court took four pages of the official reports to hold that the federal government could fund projects of national importance under an expanded reading of the Taxation and Appropriation Clause, even if this was not strictly enumerated under the powers of Congress, but not merely local projects. The principal authority cited on this particular point was Hamilton’s Report on Manufactures, restated four decades later in Supreme Court justice Joseph Story’s Commentaries.
The next year the Supreme Court upheld federal unemployment insurance in Chas. Steward Machine Co. v. Davis and Social Security in Helvering v. Davis, even though neither is enumerated in the Constitution. Both decisions held the financial power of the federal government can deal with emergencies beyond the capacity of state governments. Helvering also said the distinction between local and national is largely for Congress to decide. In a chapter of Public Policy and the General Welfare (1941), Charles Beard trumpeted this newly found power also in appellate cases, Greenwood County, S.C. v. Duke Power Co., and Kansas City Gas & Electric v. Independence, Kan., regarding federal assistance to electric power plants, and an Attorney General opinion regarding housing.
If there seems to be no extended Supreme Court discussion of the constitutionality of federal involvement with housing, United States v. Emory (1943) did hold the purpose of the National Housing Act was to "spend ourselves rich," and City of Cleveland v. United States (1946) held it constitutional, if only with a footnote of citations to Butler, Steward and Helvering. Presumably constitutional under this line of thought, and fit for litigation in courts instituted for great national issues, is 42 United States Code 1701r, dealing with pets in federally subsidized senior citizen housing.
Under this line of thought expenditures obviously local in nature gained a national dimension through the federal power of the purse, for all practical purposes, to "spend ourselves rich." As an emergency measure to deal with the Great Depression, Social Security was held constitutional on this basis alone, an "emergency" measure in effect for close to seven decades now.
About this same time the Supreme Court also expanded greatly the federal power to regulate interstate commerce. A farmer growing grain on his own land to feed his own livestock was held to be in interstate commerce because he affected prices of commodities in interstate commerce. Wickard v. Filburn, (1941). Among other cases to similar effect, Borden v. Borella (1945) held an elevator operator to be in interstate commerce. The famous footnote 4 in the Carolene Products case (1938) said economic issues would not get strict constitutional scrutiny. In other words, the constitution has been suspended in this regard.
After decades of opposing overpriced, extravagant transit projects, in 2000 I sued to have the federal funding of local transit projects declared unconstitutional. The government’s own motion to dismiss described a federal program to fund local projects. I filed a motion for summary judgment, that it is plainly contrary to the prohibition in Butler. The courts never ruled on that question, my severe objections notwithstanding. The federal statute, Title 49, United States Code, Chapter 53, does not even claim a national purpose.
What would Alexander Hamilton himself think of such spending? In Federalist No. 34, one of the papers explaining the Constitution and arguing for its ratification, he said,
"What are the chief sources of expense in every government? What has occasioned that enormous accumulation of debts with which several of the European nations are oppressed? The answer plainly is, wars and rebellions; the support of those institutions which are necessary to guard the body politic against these two most mortal diseases of society. The expenses arising from those institutions which are relative to the mere domestic police of a state, to the support of its legislative, executive, and judiciary departments, with their different appendages, and to the encouragement of agricultures and manufactures (which will comprehend almost all the subjects of state expenditures) are insignificant in comparison with those which relate to the national defense."
In Federalist No. 7, discussing the causes of domestic strife, Hamilton also left a hint, obviously overly subtle, of what would happen if the floodgates of government spending were loosed, in particular on national funding of local projects:
"... There is, perhaps, nothing more likely to disturb the tranquility of nations than their being bound to mutual contributions for any common object that does not yield an equal and coincident benefit. For it is an observation, as true as it is trite, that there is nothing men differ so readily about as the payment of money."
In recent decades the caseloads of the federal courts have spiralled and with them unpublished opinions. Now we can see why. Legal scholars have severely criticised the federal courts for such opinions, all too often giving important legal issues short shrift. At least one federal judge has defended them on grounds of the spiralling caseload. Neither, it would seem, however, has connected the caseload with constitutional abdication.
In 1949 a blue ribbon committee of bankers and professors issued a small book, Our National Debt, updating Hamilton by a century and a half. Among other things, it said that the emphasis in banking changed during the war from private loans to investment in government securites, that the banks profited greatly during the war, and that a change in philosophy was shifting much spending to Washington.
"Spending ourselves rich" with government borrowing is the very core of the long dominant Keynesian ideology. As stated by perhaps its most prominent advocate, Hitler was the first Keynesian, he brought the Keynesian remedy with a rush, and he forced England and America into the Keynesian remedy. The Keynesian remedy also came to be associated with military spending. So goes at some length the inimitable prose of John Kenneth Galbraith in The Age of Uncertainty, but still complaining about old-fashioned objections to Keynesian ideas. Even that was several years after the Presidential proclamation, "We are all Keynesians now."
Now that interest on the federal debt has been the second or third largest item in the federal budget for decades, and the country is otherwise drowning in debt as well, it is high time to see how many public officials, in cluding federal judges, own bank stocks.
Are we all Hamiltonians now? Real or counterfeit? The answer to that requires a long overdue national re-examination.
William F. Wendt, Jr.