Alexander Hamilton

The First American Planner

Almost as soon as President Washington appointed him as secretary of the treasury, alexander Hamilton was ordered by congress to produce three reports to guide debate on the American economy.

In the first report, Hamilton had to counter the arguments made by a large number of American leaders that the public debt, swollen by war and speculation, was a burden that ought to be repudiated, especially since a large portion of (the nations debt) was held by foreigners.

Hamilton responded with the argument that although the total debt, $79 million, almost $20 per capita, appeared to be a very large burden indeed, it was properly treated, a blessing, not a burden. First, strict observance of debts was the only way a new nation could earn the respect and confidence of other nations.

Second, a stably financed national debt would serve as collateral for making loans for public investiment in roads and other capital expenditure.

Third, interest payments on the public debt would be a monthly shot in the arm to the economy. Congress accepted Hamilton's approach, and within less than five years, the bonds of the United Stats enjoyed the highest rating of any bonds traded in Europe.

A National Bank, designed in the second Hamilton report, was also established by congress, although it was later terminated by President Andrew Jackson. The third report, the Report on Manufactures, was important for its concept alone, that the United States could and should be an industrial nation.

This was heresy to the Jeffersonian. In the report, Hamilton proposed three types of policies for the national government. First, there had to be the proper funding of the debt, as covered in the first to reports. Second, there ought to be legislation providing for " protecting duties, or duties on those foreign articles which are the rivals of the domestic ones intended to be encouraged."

That is to say, Hamilton favored protective tariffs. The revenue from high tariffs would then finance the third type of Hamiltonian policy: " pecuniary bounties," to stimulate and encourage new enterprises and to provide for the transportation of those commodities. Today, supporters tend to call these subsidies, and public investments; critics tend to call them give-aways and pork-barrel.

But by whatever name, Hamilton recognized that priviate capital or credit in the American agricultural economy would be insufficient to generate manufactures without some kind of centralized public assistance.

Judicious grants of money and public land to building of roads and canals would facilitate the establishment of larger and larger markets in agricultural and manufactured commodities and would tie the country together.

RELATED INFO

Hamilton, Alexander 1757 -- 1804

Cabinet officer, political thinker; born in Nevis, British West Indies.

Son of a Scottish merchant and a French Huguenot mother who died when he was 11, he went to work in a store that same year because his father's business was failing. He showed an early talent for writing and an ambition to gain an education, so aunts sent him to America in 1772; he entered King's College (now Columbia University) in 1773.

Although always a moderate in his political views, he soon aligned himself with the anti-British patriots, writing lengthy pamphlets that left many amazed at the knowledge and writing skills of a 17-year-old. With the outbreak of the American Revolution, he joined the army and by early 1776 was fighting under George Washington's command.

By March 1777 he was Washington's secretary and aide-de-camp and soon assumed considerable responsibilities that extended well beyond organizing Washington's communications and affairs--setting forth plans to reorganize not only the present army but the government that would follow the fighting. After a minor quarrel with Washington, he got himself reassigned to head an infantry regiment that he led at the siege of Yorktown. After a term in the Continental Congress (1782--83), he went into private law practice in New York City.

As one of New York's delegates to the Constitutional Convention in Philadelphia in 1787, he did not exercise much influence as his ideas on the organization of a government were too conservative; but he signed the new constitution and in October he published the first of the so-called "Federalist papers" endorsing the new government.

(Of the 85 "papers"--actually open letters, most signed by "Publius"--he wrote 51 and collaborated with James Madison on 3 others; Madison and John Jay wrote the remaining 31.) Hamilton also played a most crucial role in applying the power of his oratory and arguments to persuade New York State to adopt the Constitution.

Selected by Washington as the first secretary of the treasury (1789--95), he proceeded boldly to structure the new nation's fiscal system, setting up a national bank and national mint and taking on the national debt.

But the very aggressiveness that served to strengthen the new government also contributed to the divisiveness--particularly between Thomas Jefferson and himself--that led to the emergence of two opposing political parties, the Federalists led by Hamilton and the Democratic-Republicans led by Jefferson.

Hamilton resigned in 1795 and returned to private law practice in New York City and remained recognized as head of the Federalists, but when Jefferson and Aaron Burr ended up in a tie in the presidential election of 1800, Hamilton used his influence to get the House of Representatives to choose Jefferson because he believed Burr to be a dangerous man.

In 1804 Hamilton then used his influence to help defeat Burr's candidacy for the governorship of New York.

Burr then challenged Hamilton to a duel and although he was opposed to dueling--his own son having been killed in one in 1801--he met Burr early in the morning of July 11 at Weehauken, N.J.; Hamilton fired into the air but Burr mortally wounded Hamilton, who died the next day.

Widely admired for his intellect, Hamilton was less popular for a certain arrogance in pursuit of his own beliefs.

And if some of his ideas now seem less than congenial--especially his outspoken distrust of common people--he was probably the right man in the right place at the right time, giving form to many of the elements that allowed for the endurance of the government of the United States of America.