Gallatin also kept Hamilton’s system for keeping the public debt more or less intact. Other parts of Hamilton’s financial system were modified to serve Republican causes. Gallatin’s early  10  See, for example, Chernov’s description of Hamilton’s achievements while Secretary of the Treasury (Chernov, op.cit., ch. 17-20). 11  Using the Bank of the United States for the maintenance of financial stability was done both through lendingof-last-resort type operations and through the restriction and extension of credit in response to market conditions. Robert E Wright and David J. Cowen, Financial Founding Fathers: The Men Who Made America Rich (Univ. of Chicago Press, Chicago IL, 2006), ch. 1, provide a thorough exposition of Hamilton’s ideology, achievements, and financial system, as well as his skilled use of the Bank of the United States for the purposes of maintaining financial stability. 12  At the end of 1793, Gallatin won the election to the United States Senate, but was removed shortly thereafter from the Senate on the grounds that he did not have the minimum nine years of United States citizenship. 13  Alexander Balinky, Albert Gallatin: Fiscal Theories and Policies (Rudgers Univ. Press, New Jersey NJ, 1958) gives a very thorough introduction to the fiscal ideology of the Republican Party and how Gallatin’s fiscal theories and policies were shaped by this. Wright and Cowen, op.cit., p. 103, point out how Gallatin had more of a problem with the Federalist domination of Hamilton’s bank than with the bank itself. 14  Quoted in Chernov, op.cit., p. 469.
One possible answer, of course, is that when Thomas Jefferson became President in 1801, he quickly realized that the economic consequences of dismantling Hamilton’s financial structure would be dramatic for his presidency, his party and the country. Moreover, there is evidence that Jefferson may have indirectly given a commitment to the Federalists to preserve at least part of the Hamiltonian financial system in order to break the political deadlock during the Presidential election. What is perhaps most remarkable, however, is that Gallatin seems to have come to appreciate the genius of Hamilton’s system and advised Jefferson accordingly. In an attempt to firmly discredit Hamilton, Jefferson – shortly after becoming President – asked Gallatin to examine the archives and uncover the “blunders and frauds of Hamilton”. After searching “with a very good appetite”, Gallatin went back to Jefferson with the following remarkable assessment: “I have found the most perfect system ever formed. Any change that should be made in it would injure it. Hamilton made no blunders, committed no frauds. He did nothing wrong.” Indeed Gallatin went on to say that Hamilton had done such an outstanding job as the first Secretary of the Treasury that he had turned the post into a sinecure for all future occupants. As for the Bank of the United States, Gallatin proclaimed that “it had been wisely and skillfully managed”. 28 4. What can we learn from Gallatin’s financial achievements today? What lessons can we draw today from Gallatin’s economic policies?