Alexander Hamilton – Father of American Finance
Alexander Hamilton, orphaned at the age of eleven, born January 11, 1757 in the West Indies, so adept at business that at twelve he was put in charge of the merchant Cruger’s trading business in his frequent absences. His ability to express himself with the pen took him to New York at King’s College, now Columbia, where he became interested in political affairs. After the war began, Washington needed an aide who could handle the mail load, and because of his skill with a pen, Hamilton was chosen.
a broken nation
Alexander Hamilton realized that war required money and there was none. He also understood that there must be an efficient government and that there was a flexible Confederation. He wrote long letters to members of Congress, expounding his views. After studying law, Hamilton became a brilliant lawyer and went into politics. He was alarmed at how the Confederacy was adrift, with no central power and no real money, and how the states were arguing with each other over separate finances and tariffs. Hamilton used his pen and hammered away at his points over and over again about the importance of a strong government, a regular source of revenue, and a Constitution that grants such powers. Almost single-handedly he initiated the Constitutional Convention. There, the others listened to him with respect, but thought that his views were too strong for popular approval. The final Constitution was a compromise between Hamilton’s extreme views and the more moderate views of others, which Hamilton fought for ratification, writing the Federalist Papers, with Madison and John Jay, masterfully convincing reluctant states to align. .
After the ratification of the Constitution, George Washington took office as president and appointed Alexander Hamilton to head the Treasury of a bankrupt nation.
Hamilton’s views were strongly in favor of a central government, which he thought was the only way to get and keep peace and the only way to get such a government was to interest the rich through their pockets. He privately added that he preferred government by the wise, the wealthy, and the well-born, which was the complete opposite of Thomas Jefferson’s beliefs.
Hamilton financial plan
As treasurer, Alexander Hamilton developed a series of far-reaching measures, first, a tariff on imports and a special tax on certain domestic products. Second, a financing system whereby outstanding debts would be collected and interest-bearing bonds issued in their place, dollar for dollar, insisting that this was the only way credit could be sustained. Despite opposition, Hamilton forced funding through Congress.
Third, Hamilton’s plan was to establish a Bank of the United States, establish a free flow of currency, help business, and borrow in time of need.
The fourth part of his plan was to encourage manufacturing through government rebates and a protective tariff, which backfired and set back the industrial age in the United States for at least a generation.
Political Parties Formed
The battles over the Hamilton proposals led to the formation of the Federalist and Republican parties. Alexander Hamilton led 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 elite government. Jefferson feared centralization and government intervention in private affairs, he believed that agriculture was the true basis of freedom and believed in the instincts and votes of the common man.
Alexander Hamilton sculpted the financial world 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.