Hamilton and the Economy Hamilton and the Economy Since the birth of the country, there have been many influences on its development. The economy in particular has been an area of great importance. Many people have been factors in the growth of the United States economy. Perhaps the earliest and most influential of these was Alexander Hamilton. As shown in his effective policies, such as assumption of Revolutionary War debts, practical taxation, formation of the National Bank, and views on manufacturing, Hamilton was a dominant force from the beginning. During his term as secretary of the treasury, he acted with the power and commanding force of a Prime Minister. None of the other founding fathers contributed as much to the economys growth, and the shape of the country in general, as he did.
Alexander Hamilton was the most influential of the United States early politicians on the development of the countrys economy. One of the earliest examples of Hamiltons power was his role in the national assumption of state debts. After the Revolutionary War, individual states had varying amounts of debt. States with less debt were in favor of paying it off themselves, while those with greater debt needed some federal aid. Wanting to make the country more unified, Hamilton saw making a large collective national debt as a way to bring together the states. Hamiltons impulse, therefore, in assuming all outstanding state debts was to avoid unnecessary and destructive competition between state and federal governments, and at the same time to preempt the best sources of revenue for the United States Treasury (Elkins and McKitrick 119).
The author states Hamiltons motives for assumption were to eliminate competition between the states that might damage the union. This fits in with his larger policy of strong national government. Other politicians were opposed to this, such as Thomas Jefferson and James Madison. Their opposition to the plan went away as assumption became associated with other less controversial plans of Hamiltons. Madison even turned in defense of the plan after being convinced of Hamiltons financial vision (Bowers 61).
Hamilton made a compromise turning out in his favor when he allowed Madison and Jefferson to have a capital on the Potomac River. This allowed him to pass his plan more easily while giving up something of little importance to him or the countrys wellbeing (Bowers 65). Hamilton also showed his influence in the development of the countrys taxation policies. He set up funding programs to pay off the now large national debt. In raising money to meet the obligation of Assumption, he resorted to direct taxation as little as possible, and made luxuries bear the burden (Bowers 20). Hamilton preferred taxing luxuries that only the rich could afford instead of merely taxing the entire population equally. Part of Hamiltons vision was to have a very commercial economy.
He did not want taxation to discourage business growth, and made great efforts to make excise inspection non-oppressive (Mitchell 186). Hamilton did whatever was in his power to stimulate growth of industry so that the nation might grow into an economic giant. The early enactment of a National Bank would never have existed without Hamiltons drive. He single handedly planned and set the foundation for a bank, which was essential to his fiscal philosophy. His presentation to congress was so detailed and thorough that a majority if the House even needed explanation as to the rudimentary function of the bank (Mitchell 197).
Jeffersonians opposed this plan because they had a strict view of the constitution, which did not call for a national bank. Hamilton used the elastic clause to justify this, and felt that the bank was necessary and proper to the function of the government. He also knew that the politicians he needed the support of were aristocrats and would favor a strong central economy, as opposed to the Jeffersonian vision of a nation of self-sufficient farmers (Dos Passos 238). Here Hamilton knew that the common man, which was represented by the Republicans, would not play a role in the banks formation, and that the Federalists would be able to pass the bank. The bank would not have passed, however, had Hamilton not personally convinced the president of its merit.
Washingtons approval led to immediate subscription of the capital and a successful beginning (Mitchell 203). Hamiltons bank proved to be essential to the countrys early economic stability, and was a product of his singular effort. Included in Hamiltons vision of the country was an emphasis on industry. He foresaw the United States as becoming an industrial power on the worlds scale. All in all, Hamiltons report brilliantly expounded the doctrine of a powerful, prosperous and self-contained nation and blue printed the exposition with a program well calculated to achieve it (Schachner 187).
In addition to this, Schachner also calls December 5, 1791s report the most eloquent argument ever made to prove the necessity for industrializing a nation (186). Hamilton wrote an exquisite report that well supported his argument for an industrialized nation. He acted even before gaining the approval of Congress, as he made commercial investments while still a civilian. He developed S.U.M. or the Society for Establishing Useful Manufactures, completely independent of the government (Dos Passos 238). Hamiltons foresight was durable and sound, he saw the United States as it is today. Our country is now powerful in importing and exporting industrial products and is not a Jeffersonian nation of farmers.
The policies that Hamilton was in favor of have led the United States to a very strong economy and a world power. Under Washington, Hamilton became the countrys first Secretary of the Treasury. Although Secretary of State is usually thought of as highest cabinet post, Hamilton made the treasury immensely powerful. He made the position into a virtual prime ministry, controlling other parts of the government (Mitchell 298-299). Although his was the second position in the cabinet, he thought of himself as the Prime Minister. The other members of the Presidents official family were his subordinates (Bower 169).
Hamilton created a position so powerful he was able to control any part of the government he needed to cooperate with his policies. As Hamilton saw it the secretaries of war and state should be subordinate officers as they were in England. How far he had succeeded could be judged by the budgets for the three departments: In the budget presented to congress in January 1791 about $57,000 was allotted to the Treasury, $6,500 to the war department and $6,200 to Jeffersons department of state. (Dos Passos 239) The quote shows the extent that he controlled other departments of government through their funding, with his own department receiving a vast majority of the budget and the power that comes with it. The mercantile and financial stakes fell directly in line under his jurisdiction, as did Washingtons support and confidence (Dos Passos 239-240).
The office of Secretary of Treasury became the highest point of importance in the finances and politics of this period, and shows Hamiltons outstanding legacy of leadership, practicality, and patriotism. Hamiltons vision has proven itself correct over time. The United States now shows traits, which were foreseen by him as being beneficial to our country. The debates that arose over his programs marked the birth of political parties, with the country dividing into Federalists and Republicans (Mitchell 190). Hamilton was most influential on the Federalist Party then any other politician in history. No one individual did more to alter and shape the Federalist Party as a whole than Alexander Hamilton (Elkins and McKitrick 22).
Another trait that has since benefited the United States was a department that he formed to control smuggling, which has since grown and evolved as the United States coast guard (Mitchell 181). Hamilton has made many lasting contributions to help the development of the United States economy. Hamilton wanted an industrialized economy. To help achieve this he supported taxes on foreign goods, encouraging growth of American Industry. Through supporting tariffs on foreign goods, Hamilton supported economic infrastructure, and advocated a nationally directed, controlled economy, in the interest of foreign enterprise (Morris 130). Hamilton clearly envisioned the nations potential as an economic power, and took great impetus in shaping economic infrastructure.
Of the many figures in American History, Alexander Hamilton has proven himself one of the most versatile and influential. His policies and ideals have helped the United States blossom into a prosperous world power. Through his power as secretary of Treasury and his convincing intellectual efforts, he was able to dominate the nations early political environment. Hamiltons patriotic endeavors have proven themselves to be durable and in the best interests of the United States.