Restore Glass–Steagall and Hamilton’s Credit System

Alexander Hamilton

Historically, Alexander Hamilton’s prescription for national banking and a federal credit system has been proven to be the most effective policy method of gen­erating real physical wealth, building essential infra­structure, and radically upgrading the living standards and livelihood of the American people. The applica­tion of Hamiltonian economics by Abraham Lincoln’s economist Henry C. Carey is what became known as the “American System” of political economy, resulting in Lincoln’s “greenback” policy which powered the indus­trial development of the Union, including the comple­tion of the trans-continental railroad. Other examples of this include the explosion of internal improvements fueled by a National Bank under President John Quincy Adams, and Franklin Roosevelt’s use of Glass-Steagall and federal credit mechanisms like the Reconstruction Finance Corporation to rebuild our nation’s economy to overcome the great depression and defeat fascism.

Established in 1817, the Second National Bank fueled the development of much of America's early canal, railroad, and other infrastructure.

Presently, we are witness­ing the demise of the global floating-exchange-rate finan­cial system established over a half-century ago, after the Aug. 15, 1971 decoupling of the U.S. Dollar from the gold reserve system—which has now disgorged a $2 quadrillion speculative bubble, sustained by looting the physical econo­my of the so-called North, but especially of the Global South. In the United States, this took the form of the conversion of the U.S. economy into a “post-industrial” nightmare, only sustained by the criminal devaluation of poorer na­tions’ currencies allowing cheap imports into the United States as the “importer of last resort.” Now the nations of the Global South, representing the vast majority of the world’s population, have wisely chosen to abandon this financial Titanic to instead pursue a pathway more akin to the traditional American System approach of prioritizing credit for infrastructure, industrial develop­ment and scientific advancement. Chi­na’s Belt and Road Initiative is a prime example of this to­day.

The immediate “lifeboat” for the United States to save itself from this sinking transatlantic Titanic, would be to return to Franklin Roosevelt’s 1933 Glass-Steagall Act. “Decoupling” from the unsustainable Wall Street/City of London financial bubble would thus allow a return to a productive U.S. Dollar— like Lincoln’s greenback—as distinct from the speculative London-dollar, or “Londol­lar,” which rules the trans-At­lantic financial sector today. The United States could then create a new Hamiltonian na­tional banking and credit sys­tem based on rapid investment into non-speculative produc­tive activities like manufac­turing, energy, infrastructure, as well as science drivers like fusion energy development and space exploration. This policy is the intention of La­Rouche’s “Four New Laws to Save the U.S.A” (see intro).

Importantly, this would signal a return of the United States to her original anti-colonial, pro-development tradition, an especially fitting achievement for the cel­ebration of the 250th anniversary of the American Rev­olution. A United States rid of the domination by Wall Street and City of London interests would also open the door to a working “win-win” alliance with Russia, China and the Global South. Such an alliance is the only sure basis for peace and a new era of economic progress for all.

For more, see thelarouche.org/credit