Alexander Hamilton
The Money Man
Presentation created by Robert Martinez
Primary Source: America’s History (Henretta, Brody, Dumenil)
Images as cited.
George Washington’s most
important decision was his choice of
Alexander Hamilton as secretary of
treasury.
An ambitious self-made man of great
charm and intelligence, Hamilton married
into the Schuyler family, rich and
influential Hudson River Valley
landowners, and became a prominent
lawyer in New York City.
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As a delegate to the Philadelphia
convention, Hamilton took a strongly
conservative stance. He condemned the
“amazing violence and turbulence of the
democratic spirit” and called for an
authoritarian government headed by a
president with near-monarchial powers.
http://faculty.polytechnic.org/gfeldmeth/1094a.html
As treasury secretary, Hamilton
devised bold policies to enhance
national authority and to favor
wealthy financiers and merchants.
www.earlyamerica.com
He outlined his plans in three
groundbreaking reports to Congress:
on public credit (January 1790), on a
national bank (December 1790), and on
manufactures (December 1791).
http://articles.philly.com/2011-07-10/news/29758252_1_congress-hall-temporary-capital-independence-hall-group
Hamilton called on Congress to pay at
face value the millions of dollars in
securities issued by the Confederation
government. He reasoned that, as an
underdeveloped nation, the United States
was heavily dependent on foreign loans
and needed good credit to survive.
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Hamilton proposed that the national
government improve the public credit by
assuming the war debts of the states.
This plan would favor wealthy creditors.
It unleashed a flurry of speculation and
government corruption.
findingthefounders.com
In December 1790, Hamilton issued a
second report, which asked Congress to
charter the Bank of the United States.
The bank would be jointly owned by
private stockholders and the national
government.
aphistory2010.yolasite.com
Hamilton argued that the bank, by
making loans to merchants, handling
government funds, and issuing bills of
credit, would provide financial stability
and a respected currency for the speciestarved American economy.
www.mccullagh.org
These potential benefits persuaded
Congress to charter Hamilton’s
bank, for a period of twenty years,
and send the legislation to the
president for approval.
www.philadelphiafed.org
At this critical juncture, Secretary of
State Thomas Jefferson joined the
ranks with James Madison against
Hamilton’s financial initiatives.
www.americaslibrary.gov
Jefferson had condemned the “corrupt
squadron of paper dealer” who
speculated in southern war bonds. Now
he charged that Hamilton’s scheme for a
national bank was unconstitutional.
Jefferson’s opinion
on the National Bank.
http://www.loc.gov/exhibits/jefferson/jefffed.html
“The incorporation of a Bank,” Jefferson
told President Washington, was not a
power expressly “delegated to the United
States by the Constitution.” Jefferson’s
argument rested on a strict interpretation
of the national charter.
www.cnbc.com
In response, Hamilton devised a loose
interpretation of the Constitution, stating
that Article I, Section 8, empowered
Congress to make “all Laws which shall
be necessary and proper” to carry out
the provisions of the Constitution.
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Agreeing with his treasury
secretary, Washington signed
the legislation.
http://www.aoc.gov/cc/art/cox_corr/g_exp/washingtons_farewell.cfm?closeup=1
Lastly, Hamilton concentrated on revenue
to pay the annual interest on the national
debt. At Hamilton’s insistence, Congress
imposed a number of domestic excise
taxes, including a duty on whiskey
distilled in the United States.
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Next, the treasury secretary proposed
higher tariffs on foreign imports.
Although he urged the nation to become
self-sufficient in manufacturing, Hamilton
did not support high protective tariffs
that would exclude competing foreign
products.
www.falmanac.com
Instead, he advocated revenue
tariffs that would pay the interest on
the debt and defray the expenses of
the national government.
www.sonofthesouth.net
Hamilton’s scheme worked brilliantly. As
American trade increased, customs
revenue rose steadily. Tariffs also had the
unexpected effect of encouraging rapid
settlement of the West, an outcome
opposed by Hamilton and favored by his
political opponents.
my.hamilton.edu
Because import duties brought in 90
percent of the U.S. government’s
income from 1790 to 1820, the
government was able to sell lands in
the national domain at ever-lower
prices.
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All in all, Hamilton had devised a
strikingly modern fiscal system that
provided the new national government
with financial flexibility and stability.