Keep Hamilton

On this July Fourth weekend, it is fitting to discuss an issue of American financial history: Paper currency and the faces on it. The current debate is not over the decision to put a woman, finally, on the paper currency. There have been women on coins, but only dead white men on paper. Clearly, it is time for that to change.

What troubles many of us in the financial community is the decision by Treasury Secretary Jack Lew to replace Alexander Hamilton's portrait on the $10 bill with the yet-to-be-determined female face. Hamilton, the founder of the American financial system, should be retained and instead, Andrew Jackson, a financial system disaster, should be dumped from the $20 bill.

There are now seven bills in circulation: $1, $2, $5, $10, $20, $50, and $100. Five are graced with presidents - George Washington ($1), Thomas Jefferson ($2), Abraham Lincoln ($5), Andrew Jackson ($20), and Ulysses S. Grant ($50). Alexander Hamilton is on the $10 bill, while Benjamin Franklin is on the $100.

Of those great men, who should be erased? It is hard to argue against keeping Franklin, and can anyone really imagine removing Washington, Jefferson, or Lincoln from the currency? That leaves Grant, Jackson, and Hamilton.

Hamilton was the only non-president of the remaining three. But he was a Founding Father, coauthor of the Federalist Papers, chief aide to General Washington, and critical to the passage of the Constitution.

Even more important, he was probably the most significant individual in the financial history of the nation. He became the first secretary of the treasury, he stabilized the fledgling nation's finances, he created the First Bank of the United States, which was the beginning of central banking this country, and he created the foundations for our currency.

It is hard to imagine what the nation would have become if Hamilton had not led the country out of its post-Revolutionary war financial chaos. As former Fed Chairman Ben Bernanke wrote recently, "Hamilton was without doubt the best and most foresighted economic policymaker in U.S. history."

Given Hamilton's place at the top of the Pantheon of American Finance, it is inconceivable that he would be removed from the currency. That leaves us with Grant and Jackson.

Grant and Jackson were both generals, and neither is considered to have been a great president. But what separates them is that Jackson was a disaster when it came to the financial system.

Andrew Jackson was everything that Alexander Hamilton was not. He was antagonistic toward central banking and vetoed the Second Bank. That heightened the economic downturn of the times and played a role in the financial instability that persisted for the following 75 years. It took the founding of the Federal Reserve in 1913 to finally overcome the problems Jackson helped set in motion.

So, let's review. Alexander Hamilton, the most important person in the history of U.S. finance, is being given the boot, but Andrew Jackson, who created financial instability, is being retained. Am I missing something here?

There must be some reason that Treasury Secretary Lew, a perfectly rational financial expert who is knowledgeable about Alexander Hamilton's place in financial history, would make such a strange decision.

Lew could have removed Grant from the $50 bill without setting off a firestorm. But the $50 bill is not a high-profile denomination, and that decision might have troubled those lobbying for the inclusion of a woman.

The only other explanation is that the $10 bill will be undergoing a redesign soon while the $20 bill will not. While timing may be critical in most things, it should not determine whose face is on which bill. Very simply, the treasury secretary's proposal to dump Hamilton is a "Lew-ser."

This weekend, we celebrate the founding of our nation. Alexander Hamilton was one of the most important people in that process and in the survival of the new nation. Celebrate history and keep Hamilton on the $10 bill.