Alexander Hamilton and the National Economy

Alexander Hamilton and the National Economy Alexander Hamilton made a name for himself during the American Revolution, eventually rising to be the untitled Chief of Staff for George Washington during the war. He served as a delegate to the Constitutional Convention from New York and was one of the authors of the Federalist Papers with John Jay and James Madison. Upon taking office as president, Washington decided to make Hamilton the first Secretary of the Treasury in 1789. His efforts in this position were hugely important for the fiscal success of the new nation. Following is a look at the major policies that he helped implement before resigning from the position in 1795. Increasing Public Credit After things had settled from the American Revolution and the intervening years under the Articles of Confederation, the new nation was in debt for more than $50 million. Hamilton believed that it was key for the US to establish legitimacy by paying back this debt as soon as possible. In addition, he was able to get the federal government to agree to the assumption of all the states debts, many of which were also sizable. These actions were able to accomplish many things including a stabilized economy and a willingness of foreign countries to invest capital in the US including the purchase of government bonds while increasing the power of the federal government in relation to the states. Paying for the Assumption of Debts The federal government established bonds at Hamiltons behest. However, this was not enough to pay off the huge debts that had accrued during the Revolutionary War, so Hamilton asked Congress to levy an excise tax on liquor. Western and southern congressmen opposed this tax because it affected the livelihood of farmers in their states. Northern and southern interests in Congress compromised agreeing to make the southern city of Washington, D.C. into the nations capital in exchange for levying the excise tax. It is noteworthy that even at this early date in the nations history there was much economic friction between northern and southern states. Creation of the US Mint and National Bank Under the Articles of Confederation, each state had their own mint. However, with the US Constitution, it was obvious that the country needed to have a federal form of money. The US Mint was established with the Coinage Act of 1792 which also regulated the coinage of the United States. Hamilton realized the necessity of having a safe place for the government to store their funds while increasing the ties between the wealthy citizens and the US Government. Therefore, he argued for the creation of the Bank of the United States. However, the US Constitution did not specifically provide for the creation of such an institution. Some argued that it was beyond the scope of what the federal government could do. Hamilton, however, argued that the Elastic Clause of the Constitution gave the Congress the latitude to create such a bank because in his argument it was, in fact, necessary and proper for the creation of a stable federal government. Thomas Jefferson argued against its creation as being unconstitutional despite the Elastic Clause. However, President Washington agreed with Hamilton and the bank was created. Alexander Hamiltons Views on the Federal Government As can be seen, Hamilton viewed it as supremely important that the federal government establish supremacy, especially in the area of the economy. He hoped that the government would encourage the growth of industry in a move away from agriculture so that the nation could be an industrial economy equal to those of Europe. He argued for items such as tariffs on foreign goods along with money to help individuals found new businesses so as to grow the native economy. In the end, his vision came to fruition as America became a key player in the world over the course of time.