Alexander Hamilton – Father of American Finance
Alexander Hamilton, an orphan at the age of eleven, born on January 11, 1757, in the West Indies, so able in business that at the age of twelve was put in charge of merchant Cruger’ trading business in his frequent absences. His ability to express himself with the pen landed him in New York at King’s College, now Columbia, where he became interested in political matters. After the war started, Washington needed an aide who could take over the burden of correspondence and because of his ability with the pen, Hamilton was chosen.
A Broke Nation
Alexander Hamilton realized that war required money and there was none. He also understood there must be efficient government and there was a loose Confederation. He wrote long letters to members of Congress, setting forth his views. After studying law, Hamilton became a brilliant lawyer and entered into politics. He was alarmed at the way the Confederation was drifting, having no real central power or money and how the states were bickering among themselves over separate finances and tariffs. Hamilton used his pen and hammered his points again and again of the importance of a strong government, a regular source of income, and a Constitution granting such powers. Almost single-handedly he initiated the Constitutional Convention. There, the others listened to him with respect, but thought his views too strong for popular approval. The final Constitution was a compromise of Hamilton’s extreme views and more moderate views of the others, of which Hamilton fought for ratification, writing the Federalist Papers, with Madison and John Jay, where they masterly convinced the reluctant states to come in line.
After the ratification of the Constitution, George Washington took the office of President and appointed Alexander Hamilton to head the Treasury of a bankrupt nation.
Hamilton’s views were strongly for a central government, which he thought was the only way to gain and maintain peace and the only way to get such government was to interest the rich through their pocketbooks. He added privately that he preferred the rule of the wise, the rich and the well-born, which was the complete opposite of the beliefs of Thomas Jefferson.
Hamilton’s Financial Plan
As Treasurer, Alexander Hamilton evolved a series of far-reaching measures, First, a tariff on imports and an excise tax on certain domestic products. Second, a funding system by which the outstanding debts would be called in, and interest-bearing bonds issued in their place, dollar for dollar, insisting that this was the only way credit could be sustained. In spite of the opposition, Hamilton forced the funding through congress.
Third, Hamilton’s plan was to set up a Bank of the United States, to establish a free flow of currency, to aid business, and to borrow from in time of need.
Part four of his plan was to encourage manufacturing through government bounties and a protective tariff, which failed and delayed the industrial age in the United States for at least a generation.
Political Parties Formed
Battles over Hamilton’s proposals led to the formation of the Federalists and the Republican parties. Alexander Hamilton headed the Federalists and Thomas Jefferson the Republicans.
Hamilton called for a nation strong at home and respected abroad. He believed in economic planning, a manufacturing economy, and a rule of the elite. Jefferson feared centralization and government intervention in private affairs, thought agriculture the true basis of freedom and believed in the instincts and votes of the common man.
Alexander Hamilton sculpted the financial world in which we live in today. In a sense it is Hamilton’s World. His financial schemes saved the nation from perishing. His dream of the industrial system came true. …