Alexander Hamilton – father of American finance

Alexander Hamilton, an eleven-year-old orphan, was born on January 11, 1757, in the West Indies, so capable of doing business that at the age of twelve he was in charge of the commercial business of the merchant Krueger in his frequent absences. His ability to express himself with the pen landed him in New York at King’s College, now Columbia, where he became interested in political affairs. After the start of the war, Washington needed an assistant to take on the burden of correspondence, and because of his pen skills, 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 effective government and that there was a free Confederation. He wrote long letters to members of Congress, setting out his views. After studying law, Hamilton became a brilliant lawyer and entered politics. He was concerned about the way the Confederacy moved without real central government or money and how states quarreled over separate finances and tariffs. Hamilton uses his pen and again and again kills his points about the importance of a strong government, a regular source of income, and the constitution conferring such powers. He initiated the Constitutional Convention almost alone. There, the others listened to him respectfully, but thought his views were too strong to be approved by the people. The final constitution is a compromise with Hamilton’s extreme views and the more moderate views of the others, of which Hamilton fought for ratification by writing Federalist documents, along with Madison and John Jay, where they masterfully persuaded reluctant states to come to the line.

Following the ratification of the constitution, George Washington took over as president and appointed Alexander Hamilton to head the Treasury Department of a bankrupt state.

Hamilton’s views were strong for a central government, which he said was the only way to achieve and maintain peace, and the only way to get such a government was to interest the rich through their pocket books. He added in private 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’s financial plan

As treasurer, Alexander Hamilton developed a series of comprehensive measures, first, import duties and excise duties on some domestic products. Second, a system of financing through which outstanding debts will be required, and bond bonds issued in their place, dollar for dollar, insisting that this is the only way to maintain the loan. Despite opposition, Hamilton forced congressional funding.

Third, Hamilton’s plan was to set up a bank in the United States, establish a free flow of currency, support business, and borrow when needed.

A fourth part of his plan was to promote production through government awards and a protective tariff, which failed and slowed the industrial era in the United States for at least a generation.

Formed political parties

The battles for Hamilton’s proposals led to the formation of the Federalists and Republican parties. Alexander Hamilton heads the Federalists and Thomas Jefferson heads the Republicans.

Hamilton called for a nation strong at home and respected abroad. He believed in economic planning, production economics, and elite governance. Jefferson feared centralization and state interference in private affairs, believed that agriculture was the true foundation of freedom, and believed in the instincts and voices of the common man.

Alexander Hamilton sculpted the financial world we live in today. In a sense, this is the world of Hamilton. His financial schemes saved the nation from destruction. His dream of an industrial system came true.

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