Faces on Fiat Currency, Morality & Money

Apr 22, 2016.

The real question about sovereign money is who is sovereign.

Both Harriet Tubman, who will be the new face on the 20-spot, and Andrew Jackson, who will be consigned to the rear, have deep relationships with the world of private finance–very different, but deep and enduring. While the symbolic significance of a slave replacing a slaveowner is impressive enough, there is also something important to say in this monetary morality play about banking, finance, and the creation of money.

Tubman and Jackson share a connection with finance in that they occupied opposite ends of a hierarchy. The role of slave labor in the building of America–abetted by the very same financial players who messed with America’s monetary system–helped create the material foundation for the abuses of big finance. People of color have always been the first and most systemic victims of opaque, private banking and finance. They were its commodities, an arrangement Andrew Jackson approved and profited from, and big banks still treat disadvantaged communities as such. It’s true that Jackson also made an interesting argument against paper currency and the abuses of the national bank he shut down. I’ll get to the paper currency argument below, but ultimately my takeaway is that we don’t need Andrew Jackson on a piece of fiat currency to understand his critique of money. Having Tubman on the front instead sends a message, albeit symbolic, about why we need engines of economic justice like public banks.

As a pre-empt, I’m fully aware that the rhetoric and institutional forces behind these face-changes are not motivated by any of this. But walk through this with me anyway–I’m trying to articulate why an anti-slavery revolutionary is a better moral model for economic reform than a genocider who happened to hate paper money, even if he hated it for some of the same reasons we distrust Wall Street.

Writing for the Washington Post, Ana Swanson calls Tubman “a daring and principled fighter. Her dramatic career included defying slaveowners, smuggling dozens of slaves to freedom as part of the Underground Railroad, leading raids in the Civil War, and fighting for women’s right to vote — all of which she accomplished with a disability.” Catherine Clinton, whom Swanson interviews for the piece, says Tubman “felt very much that she was part of a collective body, as part of the Underground Railroad.” In fact, Harriet Tubman, who started out in life with nothing–bonded, not allowed to pursue wealth at all–spent her entire life fighting for other people’s freedom, including the freedom to participate in economic life. Tubman struggled with poverty, in fact, throughout the entirety of her activist career–because she was doing so much, because she had no wealth to begin with, because she gave away huge portions of what support she did earn. She died penniless in a care facility she had helped finance, surrounded by her beneficiaries. A few years earlier, in an episode fans of Andrew Jackson’s economic beliefs may or may not find ironic, Tubman had been swindled out of $5000 by gold dealers.

Jackson would see Tubman as not quite human. A slaveowner himself (current cultural darling Alexander Hamilton was too, though not as ensconced in it as Jackson) his cruelty emerged at the intersection of two great acts of mass oppression in American history:

Indian removal was not just a crime against humanity, it was a crime against humanity intended to abet another crime against humanity: By clearing the Cherokee from the American South, Jackson hoped to open up more land for cultivation by slave plantations. He owned hundreds of slaves, and in 1835 worked with his postmaster general to censor anti-slavery mailings from northern abolitionists.

Now, it’s also true that Jackson expressed deep concerns about monetary practices that he believed hurt the country, including poor people (though he undoubtedly constrained that concern to poor white people). The foundation of his beliefs about currency was his belief that the United States Constitution limited legal tender to gold and silver coin. Other prominent early Americans (including James Madison and the lesser-known Roger Sherman, the only person who signed the Declaration, the Articles of Confederation, and the Constitution) held that belief. Eventually, it became one of the U.S. Supreme Court’s most litigated issues in the mid-to-late 19th century, with the Court ultimately concluding in Juilliard v. Greenman, an 8-1 decision, that the necessary and proper clause, and McCulloch v. Maryland, outweighed the other side’s speculative arguments that, because some of the founders feared paper money and sought to iterate that fear into an outright constitutional ban, that we should risk financial disaster and actually ban paper money.

The most important part of the Court’s rationale, important for the purposes of this post as well, was that this was a political, not legal question:

the question whether at any particular time, in war or in peace, the exigency is such, by reason of unusual and pressing demands on the resources of the government or of the inadequacy of the supply of gold and silver coin to furnish the currency needed for the uses of the government and of the people, that it is as matter of fact wise and expedient to resort to this means is a political question, to be determined by Congress when the question of exigency arises, and not a judicial question, to be afterwards passed upon by the courts.

But well before Julliard, Jackson had relentlessly attacked the system in the final speech of his presidency. His arguments were not unsound:

The paper system being founded on public confidence and having of itself no intrinsic value, it is liable to great and sudden fluctuations, thereby rendering property insecure and the wages of labor unsteady and uncertain. The corporations which create the paper money can not be relied upon to keep the circulating medium uniform in amount . . .

The banks by this means save themselves, and the mischievous consequences of their imprudence or cupidity are visited upon the public. Nor does the evil stop here. These ebbs and flows in the currency and these indiscreet extensions of credit naturally engender a spirit of speculation injurious to the habits and character of the people. . .

Some of the evils which arise from this system of paper press with peculiar hardship upon the class of society least able to bear it.

Like many early American leaders, Jackson has these flashes of concern for the unfortunate. But if I had a sovereign nickel for every critic of finance capital prior to 1900 who was also a white racist, I’d be able to buy a yacht (and if I had a dime for every such person after 1900 I could feed my family at a five-star restaurant). This isn’t the place to debate the gold standard, but whatever one might say about it, it’s either neutral on the public banking question or against it. Requiring that any unit of credit or currency is linked to a unit of existing metal is obviously restrictive. But the real question, as I said outright, is who is doing the regulating.

Today, the Federal Reserve can create money to purchase U.S. Government securities on the open market, arguably justified by Article I, Section 8 of the Constitution. Those of us in the public banking movement might share Jackson’s disdain for that, but there’s no reason to think he would champion the kind of egalitarian, extremely democratic alternative championed by the kinds of people who are fighting to establish public banks in their cities and states now. Rather, the value-systems of current grassroots activists for economic justice are far more similar to Tubman, who constructed networks of safe houses rescuing people from slaveowners like Jackson. At the risk of sounding trite and minimizing the magnitude of Tubman’s work, I’d rather see public banks as safe houses for our money, our livelihood, our community resources, than see the entire monetary reform project as a way of protecting the individual contracts of the powerful, which was and still is the motivation behind many gold and silver advocates.

So in that sense alone, replacing Jackson with Tubman carries an economic argument more powerful and relevant today than the argument about fiat currency. The only relevant part of that argument, and so the, like, ten percent of what Jackson actually got right in his dry old racist mind, is that fiat currency inscribes a horrific power onto private financial players. That truth is of overriding importance to the public banking movement.

If faces on money is an irrelevant question, the question behind fiat currency is evasive and distracting if it doesn’t also interrogate the gap between those making banking and finance decisions and those affected by the decisions. That gap is nowhere wider than between the private bankers Jackson criticizes and the slaves he owned.

Eventually there will probably be no paper currency anyway. The more important question is whether we want to model our economic practices, including our banking practices, in a world that reflects the praxis of Harriet Tubman, or the praxis of Andrew Jackson. Tubman, it is said, “never lost a passenger” on the Underground Railroad. That, too, is a philosophy to emulate when fighting for financial and economic reform. Faces on fiat money are only symbolic, but powerfully symbolic. So, with appropriate apologies to those who’ve been geeking out on Jackson’s economic populism, I conclude that Tubman beats Jackson on style, struggle, and vision, and being a freedom fighter rather than a genocidal hater.

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