The Bernanke Ten Spot

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Now he tells us. The former chairman of the Federal Reserve, Ben Bernanke, is claiming in a blog post that he’s a huge fan of Alexander Hamilton. Mr. Bernanke qualifies America’s first treasury secretary as “among the greatest of our founders for his contributions to achieving American independence and creating the Constitution alone. In addition to those accomplishments, however, Hamilton was without doubt the best and most foresighted economic policymaker in U.S. history.” So Mr. Bernanke is opposing the demotion of Hamilton from his featured spot on the ten-dollar bill.

The irony of this is that while chairing the Federal Reserve, Mr. Bernanke traduced every principle Hamilton held dear, particularly the idea of sound money defined by Congress. It was Hamilton who wrote the first law Congress passed under the authority the Constitution grants it to coin money and regulate the value there of, and of foreign coin, and to fix the standard of weights and measures. That piece of legislation, the Coinage Act of 1792, is the final fruit of what Hamilton envisaged in respect of money and the purest record of how he thought about the dollar.

That is the law that established the United States Mint, enacted that the money of account of America would be expressed in dollars, and defined the dollar as having the value of “a Spanish milled dollar” as it was then current and “contain three hundred and seventy-one grains and four sixteenth parts of a grain of pure, or four hundred and sixteen grains of standard silver.” The law recognized gold as specie in coins at a value of about 15 times that of silver, and for debasing coins of either specie established the penalty of death.

Congress resolved the contest between gold and silver at the start of the 20th century. It did so in favor of gold, which is how the dollar was defined until the default of 1971, when America closed the gold window (at which it had vowed to redeem dollars presented by foreign governments), and opened the age of fiat money. Hamilton would have been shocked down to the ground. The last connection to the principles of Hamilton’s coinage act were abandoned, and no Fed chairman has mocked the idea of a gold standard of the kind Hamilton hewed to more than Mr. Bernanke.

The chairman did this most in his speech at George Washington University, which Politico headlined “Bernanke’s first lesson on Economics: Forget about the gold standard” and which we wrote about in an editorial called “Bernanke 101.” Nor was his opposition to the Hamiltonian idea of money purely academic. Asked about gold during his testimony on Capitol Hill, Mr. Bernanke several times answered contemptuously. On his watch, the value of the dollar collapsed 55% to a 1,262nd of an ounce of gold, the second worst record of any of the Federal Reserve chairmen.

We understand that there are serious persons who reckon Hamilton, who was notoriously partial to federal power, would not have opposed the idea of fiat paper money. This point has been marked for us by no less a scholar than the journalist and historian Myron Magnet, who, his friends like to joke, dresses like the Founders because he was on such intimate terms with them. Let us stipulate Mr. Magnet’s point. The position of the Sun is that were Hamilton to learn what has been done to the dollar since he defined it, he would have sent Aaron Burr a note of thanks for sparing him the humiliation.

So forgive us if we take with a grain of salt Mr. Bernanke’s protestations in favor of Hamilton. His own record suggests that he has no more regard for the principles Hamilton believed in than he does for the man in the moon. In respect of the dollar, he opposes the very definition that Hamilton hewed. The fact is that the ten dollar Federal Reserve note is worth today but a percent or two of what it was worth when the Fed was created. Maybe the face to put on it is neither Alexander Hamilton nor Harriet Tubman but Ben Bernanke himself.


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