Jack Lew is not the most controversial Treasury Secretary in history. He certainly has aroused less ire than his predecessor Tim Geithner, who presided over the hated, but ultimately necessary, bailout of the United States’ banking system. The most famous thing about Lew, who was sworn in two years ago, is probably his erstwhile goofy signature, which had to be amended before it was placed on the nation’s currency.
But that is almost certainly about to change, as the nation is abuzz today with Lew’s announcement that he has decided to, for the first time, place a woman on U.S. paper currency. The decision to put a woman on a Federal Reserve note is long overdue, and laudable. But the decision to put a woman specifically on the $10 bill, with a diminished place for Alexander Hamilton, the nation’s first treasury secretary, is a real head scratcher.
After the American revolution, Hamilton was a driving force behind the decision to have the federal government assume the debts of the individual states, which helped bind the young nation together and give investors around the world reason to root for the success of the fledgling state. He was also the progenitor of the First Bank of the United States, which helped quell the effects of the financial panic of 1792, through the purchases of U.S. government debt, much like the Federal Reserve does today.
The first central bank in American history was fiercely opposed by founding fathers like Thomas Jefferson, who feared that the bank would concentrate power in industrial centers like Philadelphia and New York. As Jefferson biographer Richard B. Bernstein wrote, Jefferson had a deep attraction toward a vision of America that was
An agrarian republic of independent yeoman farmers supporting themselves by their own labors. Self-sufficient to the greatest possible degree, they would maintain their virtue, the necessary ingredient for preserving a republic, refusing the seductive lures of manufactured luxury goods and the economic activities (trade and commerce) that created and distributed them.
Needless to say, Hamilton’s vision of a United States with a strong, centralized financial system and an economy based on vibrant trade and consumption won the day. The unprecedented material wealth enjoyed by Americans today would likely never have come about if it weren’t for Alexander Hamilton and his ideas for the country’s future. There is simply no better place to honor such a man than on our currency.
Meanwhile, the man who graces the $20 bill, Andrew Jackson, was a fierce opponent of centralized banking and the model of the American economy that Hamilton championed. Partly as a result of a land deal that went wrong, President Jackson strongly distrusted paper money and the banks that issued them. Jackson did everything in his power to eradicate the Second National Bank of the United States, and was eventually successful when the bank’s charter expired in 1836.
The results were devastating. The elimination of the bank helped plunge the nation into the financial panic of 1837, what the Lehrman Institute has called “the most serious economic upheaval to face the United States until the Great Depression.” The United States would go without a central bank for more than 75 years after Jackson killed the Second Bank of the United States, until the creation of the Federal Reserve System in 1913. This period would be marked by a series of severe financial crises, with no central authority to step in and mitigate the effects. In fact, the United States often had to rely on the beneficence of private actors, as it did when financier J.P. Morgan stepped in to shore up the banking system after the panic of 1907.
Jackson’s ideas about the economy–from his abhorrence of public debt to his dedication to hard money–are antithetical to everything that defines the United States and the global financial system today. Whatever your opinions on Jackson’s presidency otherwise, it’s deeply ironic, even absurd, that his face graces one of the most commonly used Federal Reserve notes in circulation.