Alexander Hamilton

Alexander Hamilton (January 11, 1755 or 1757 – July 12, 1804) was an American politician, statesman, journalist, lawyer, and soldier. One of the United States' most prominent and brilliant early constitutional lawyers, he was an influential delegate to the U.S. Constitutional Convention and the principal author of the Federalist Papers, which successfully defended the U.S. Constitution to skeptical New Yorkers. He also put the new United States of America onto a sound economic footing as its first and most influential Secretary of the Treasury, establishing the First Bank of the United States, public credit and the foundations for American capitalism and stock and commodity exchanges.

Secretary of the Treasury

On the advice of Robert Morris, with whom he had discussed economics as an aide-de-camp during the American Revolution, President George Washington appointed Hamilton as the first Secretary of the Treasury when the first Congress passed an act establishing the Treasury Department. Hamilton served in that post from September 11, 1789, until January 31, 1795. It is for his tenure as Treasury secretary that Hamilton is considered one of America's greatest early statesmen.

Related Topics:
Robert Morris - George Washington - Secretary of the Treasury - Treasury Department - September 11 - 1789 - January 31 - 1795

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Hamilton's term was marked by innovation, planning and masterful reports. In office for barely a month, he proposed the creation of a seagoing branch of the military to discourage smuggling and enhance tax collections. The following summer, Congress authorized a Revenue Marine force of ten cutters, the precursor to the United States Coast Guard. He also played a crucial role in creating the United States Navy (the Naval Act of 1794).

Related Topics:
Smuggling - Revenue Marine force - United States Coast Guard - United States Navy - Naval Act of 1794

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He published the Report on the Public Credit in January 1790. It was a milestone in American financial history, marking the end of an era of bankruptcy and debt repudiation which had virtually ruined American credit. The plan provided for the assumption of both domestic and foreign debts. Democratic Republicans such as James Madison, Thomas Jefferson, and Aaron Burr strongly opposed Hamilton's plan. Surprisingly, it passed overwhelmingly.

Related Topics:
1790 - Bankruptcy - Plan - James Madison - Thomas Jefferson - Aaron Burr

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Hamilton advocated having the Federal government assume states' debts. Madison and Jefferson (who deferred to Madison on this issue) opposed this plan as well, but according to a story later told by Jefferson (which probably oversimplified the matter), Madison and Hamilton settled their disagreements in a private dinner meeting at Jefferson's New York residence on July 21, 1790. During this meeting, Hamilton agreed to support a Potomac River site as the future location of the nation's capital, in return for Madison's support.

Related Topics:
July 21 - 1790 - Potomac River

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Hamilton's perceptive and creative mind, coupled with a driving ambition to set his ideas in motion, resulted in many proposals to Congress. His proposals included a plan for import duties and excise taxes for raising revenue, funding the Revolutionary War debt, and suggestions on naval laws. He also developed plans for a congressional charter for the First Bank of the United States.

Related Topics:
Import duties - Excise tax - First Bank of the United States

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Strong opposition to taxing liquor erupted into the Whiskey Rebellion in Western Pennsylvania and Virginia in 1794. Hamilton felt compliance with the laws was important, so he accompanied President Washington, General "Light Horse Harry" Lee and Federal troops to help put down the insurrection, virtually without bloodshed.

Related Topics:
Whiskey Rebellion - Western Pennsylvania - Virginia - "Light Horse Harry" Lee

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During Washington's first term, Secretary of the Treasury Hamilton put forth a plan to deal with the immense national debt (which consisted of foreign, domestic and state debts). He proposed to pay off all foreign debt to help restore national credit, which would then enable the nation to issue bonds to pay off the domestic debt. He reasoned that this would help ensure that the "aristocracy of wealth and talent" had a stake in the success of the new government. His plan was for the Federal government to assume the state debts, which would stabilize the country. This would work because, if creditors wanted the individual states to thrive to be able to pay them, the Union could crumble, but if these same creditors now needed the Federal government, and subsequently the country, to thrive then the country would be supported. Hamilton also asked for a whiskey tax and a high import tax (also known as a tariff) to help pay for the debt. Congress gave him the whiskey tax but not the import tax, which was the only part of the plan Hamilton was unable to secure. Finally, Hamilton asked for the creation of a national bank to help the government fulfill its financial obligations and create some income due to interest on loans. Hamilton's financial plan is significant not only for its attempt (mostly successful) to restore the nation's credit and deal with its financial difficulties, but also because it resulted in the first national political parties.

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Hamilton, contrary to popular belief, did not believe in perpetual debt. He thought it was a weakness that should be avoided except under exceptional circumstances. He had set up a sinking fund that would have paid off all government debt, and wrote numerous articles denouncing perpetual government debt. PAH, vol. 6, pp. 98-106; Report on Public Debt, January 1790; and PAH, vol. 12, p. 570; Fact No. II National Gazette, Philadelphia, October 16 1792.

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