Brannon on Cost, 'The Price of Greatness: Alexander Hamilton, James Madison, and the Creation of American Oligarchy'

Jay Cost. The Price of Greatness: Alexander Hamilton, James Madison, and the Creation of American Oligarchy. New York: Basic Books, 2018. 256 pp. $27.00 (paper), ISBN 978-1-5416-9746-1

Reviewed by Rebecca Brannon (James Madison University)
Published on H-FedHist (August, 2021)
Commissioned by Caryn E. Neumann (Miami University of Ohio Regionals)

Printable Version:

The Price of Greatness is a tightly written (short) book that takes on a difficult subject. As Jay Cost notes in the introduction, James Madison’s evolution over time from an advocate of greater federal power to an avowed opponent of projects of federal strength is either mystifying or hypocritical, depending on your perspective. Cost argues that Madison’s progression from Federalist and ally of Alexander Hamilton to staunch opponent of centralized fiscal power was motivated by his concerns for ensuring all people equal access to and benefit from their government. All along his concern for checks and balances was part of a system determined to stymie government capture.

Jay Cost is a conservative pundit and writer who left the Republican Party in 2016 over the nomination of Donald J. Trump for president. This work tries to understand how on earth we came to this moment in American politics and life. When the book came out in 2018, it clearly attempted to explain how the tensions existent in the American democratic experiment from the very beginning have only inflated since the founding moment. Cost paints a path from the fight over oligarchy in the eighteenth century to the moment that brought seemingly improbable pseudo-populist leader Trump to the highest office in the most powerful country in the world. The events since then, including the occupation of the Capitol in January 2021, have only made these questions more urgent. Perhaps the founders did not have wonderful solutions to the inherent tensions between the needs of the people and the lure of federal power for elite self-protection. Perhaps only luck kept us from always being a very stratified and unequal society rather than Thomas Jefferson’s imagined middle-class farmers’ republic. After all, viewed in hindsight, eras of extreme income inequality have been at least as frequent as eras of muted inequality and a “middle-class” America.

This book comes at a moment when early American historians are joining a wider scholarly community concerned with extreme income inequality. Scholars such as Daniel Mandell and Terry Bouton have delved into the myriad ways in which early Americans pushed for economic equality and a fundamentally middle-class, owner society for white men. [1] Most early Americans did not want a winner-take-all society. Furthermore, they saw it as incompatible with their vision of a participatory democracy. Early Americans were suspicious of not just monarchy but also concentrated financial power. Early Americans followed a long line of early modern English and German thinkers who considered elite wealth concentration a great threat to the rights of all. With great wealth—or the possibility of great wealth—came elite power determined to advantage the few at the expense of the many. For many of these people, the American Revolution was a revolution in favor of human, or at least white male, equality. They fought in order to bring a more equal society into being. Pennsylvanians, long known for living in the best poor man’s country, wrote a revolutionary-era constitution that epitomized the movement. Power was placed in a unicameral legislature to best represent the people. There was no upper house to “contain” the lower sorts or protect elite interests. Democracy required income equality to work. Otherwise, the elite would hoard opportunity for themselves at the expense of both everyone else and the health of the democratic government itself.

Desperate times lead to desperate intellectual measures. Jay Cost has emerged from a conservatism that promotes not just free markets but market absolutism to rediscover a long-standing, home-grown skepticism of elites and their capture of market opportunities through coercive control of the mechanisms of power. The title of the book frames the real question—how did we end up with an oligarchy instead of a thriving democracy? Is this an inevitable cost?

Cost chooses to consider two allies and frenemies who co-wrote the Federalist Papers and thereby shaped a powerful vision of a strong federal government—only to diverge in the following decades. In so doing, Cost tries to move beyond the idea that the prominent founding fathers were opposed to the most egalitarian impulses of the Revolution in order to bring them into the conversation about the value, and limits, of economic equality. In so doing, he has to grapple with the reality that many of the early national elite were indeed galvanized by the chance to use their control of government to line their own pockets. He quotes a senator from Pennsylvania who resented this devolution from the ideals of the Revolutionary moment. The Constitution “raised a singular ferment.… Every one ill at ease in his finances; everyone out at elbows in his circumstances; every ambitious man, every one desirous of a shortcut to wealth and honors.” And everyone saw how the Constitution could “be wrought to their purposes,” with chances at government sinecures of all kinds (pp. 75-76). Cost shows how James Madison was alarmed by real-life examples of government capture, including speculators (including almost all of Congress) voting for the government to pay back debt at full face value once they had snapped it up for shillings on the pound. He was further alarmed by the financial panic of 1792, which was caused by emboldened speculators trading on inside information to try to corner the market on public securities. Investors felt no moral hazard as long as they controlled the public purse. Why not individualize the profits and nationalize the losses? Hamilton ended up bailing out emboldened, and connected, speculators with government money. As Cost shows, “the moneyed class acquired effective control over the government, directing public affairs for its own ends rather than the good of all” (p. 75). It had taken less than five years from the adoption of the Constitution to the possibility of ruinous government capture.

If this sounds all too familiar, consider that the point of this trade press book is to speak to where we are today. Cost’s dilemma is what he sees as Madison’s—what to do when you support strong federal government, but see it as fully captured by oligarchy? Madison famously invoked the realization that men are no angels in the Federalist Papers. In Cost’s hands, Madison’s naivete led him to be continually surprised and alarmed as things did not work out in his favor. Yet was Madison ever really thus? He mistrusted abuses of the government, but he also mistrusted financiers in general. His own wealth came from landownership and the exploitation of the enslaved. Of course he saw his interests as diverging from Hamilton’s commercial and industrial vision.

Cost is a careful scholar who struggles in assessing how far to carry his own concerns about market concentration and market capture then and now. One notable absence is any use of or reflection on the new history of capitalism. This line of thought argues that slavery, not free labor, was crucial to the development of America’s financial and industrial might. Scholars such as Caitlin Rosenthal and Edward Baptist have shown how integral slavery was to the development of modern American capitalism.[2] Cost also is torn about giving up modern conservatism’s belief that Hamilton’s vision of a market-oriented, commercial, industrial America was the right and inevitable one. He therefore admires Madison’s insights into the limitations of our government structure but also keeps repeating that he was ultimately wrong about the nation’s direction. I am not sure you can have both. Then there is the problem of Madison’s presidency, which historians usually handle by ignoring it ever happened. Cost argues that Madison certainly made mistakes but in response generated a new Democratic-Republican theory of government that merged republicanism and liberalism. Cost believes that what he calls the Federalist-Republican fusion worked reasonably well, but the tension between risks of either oligarchy or a mob rule of united factions remained. He briefly traces the nineteenth- and twentieth-century history of the 1 percent bribing politicians for their own interests. Government capture is reality.

Cost’s real concerns are apparent in his language along the way. He writes of a Republican Party as “an ideologically adrift coalition at the end of the war, desperately in need of a new direction” (p. 135). He is referring to the end of the War of 1812, but the description fits the post-Iraq moment just as well. As a conservative, Cost sees the “liberal project” as the underlying flaw that has allowed elite capture of government support while divorcing the people from trust in their government (p. 192). Needless to say, there are other possible interpretations of why Americans mistrust their government that do not depend on jettisoning the social safety net and infrastructure investments typical of wealthy democratic nations in the twenty-first century.

So what are the solutions? Cost does not really offer any. We are all lost together. He calls for a return to a spirit of investment in our shared democracy—a renewal of “the republican quality of government” (p. 195). We should remember that our fates rise and fall together, and act accordingly. The final paragraph reminds us that public opinion—the opinion of the voters—is the ultimate check on corruption. He offers no policy solutions or reassuring call to the finer angels of our nature. Overall, Cost has offered a careful and thoughtful history of how two influential theorists and writers of the American Constitution thought about the complicated issues that government needed to mediate. It is thin gruel for solutions.


[1]. Daniel R. Mandell, The Lost Tradition of Economic Equality in America, 1600-1870 (Baltimore: Johns Hopkins University Press, 2020); Terry Bouton, Taming Democracy: "The People," the Founders, and the Troubled Ending of the American Revolution (New York: Oxford University Press, 2007); Woody Holton, Forced Founders: Indians, Debtors, Slaves, and the Making of the American Revolution in Virginia (Chapel Hill: University of North Carolina Press, 1999).

[2]. Caitlin Rosenthal, Accounting for Slavery: Masters and Management (Cambridge, MA: Harvard University Press, 2018); Edward E. Baptist, The Half Has Never Been Told: Slavery and the Making of American Capitalism (New York: Basic Books, 2014). For an interesting corrective sympathetic to the main aims, see Trevor Burnard and Giorgio Riello, “Slavery and the New History of Capitalism,” Journal of Global History 15, no. 2 (2020): 225-44.

Citation: Rebecca Brannon. Review of Cost, Jay, The Price of Greatness: Alexander Hamilton, James Madison, and the Creation of American Oligarchy. H-FedHist, H-Net Reviews. August, 2021.

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