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Alexander Hamilton, father of American finance

May 11, 2021
Alexander Hamilton

Alexander Hamilton, an orphan at the age of eleven, born January 11, 1757 in the West Indies, so clever in business that at the age of twelve he was put in charge of the merchant business of the merchant Cruger 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 assistant who could handle the cargo of correspondence, and because of his skill with the pen, Hamilton was chosen.

A broken nation

Alexander Hamilton realized that the 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, stating his views. After studying law, Hamilton became a brilliant lawyer and entered politics. He was alarmed by the way the Confederacy was adrift, with no central power or real money, and how the states argued with each other over separate finance and fees. Hamilton used his pen and stressed over and over the importance of strong government, a regular source of income, and a Constitution that grants such powers. Almost single-handedly, he started 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 of the extreme views of Hamilton and the more moderate views of others, of which Hamilton fought for ratification, writing the Federalist Papers, with Madison and John Jay, where they masterfully convinced the states reluctant to get online.

After the ratification of the Constitution, George Washington assumed the office of 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 win and keep the peace and the only way to get that government was to interest the rich through their pockets. He added privately that he preferred the rule of the wise, the rich, 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 powerful measures. First, a tariff on imports and a special tax on certain national products. Second, a financing system whereby outstanding debts would be claimed and interest-bearing bonds would be issued instead, dollar for dollar, insisting that this was the only way to maintain credit. 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 foreign exchange, help businesses, and borrow when necessary.

The fourth part of his plan was to encourage manufacturing through government rewards and a protective tariff, which failed and delayed the industrial age in America for at least a generation.

Political parties formed

The battles over Hamilton’s 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 strong nation 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, 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 plans saved the nation from perishing. Your dream of the industrial system came true.

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