Alexander Hamilton - Business in United States of America
Identification: First secretary of the Treasury of the United States, 1789-1795
Born: January 11, 1755; Nevis, British West Indies
Died: July 12, 1804; New York, New York
Significance: Hamilton, as the first secretary of the Treasury, helped establish a national economy with durable structures. A Federalist, he advocated centralized institutions to formulate financial and political solutions.
Alexander Hamilton played an important role in the American Revolution, serving as an aide to General George Washington and later leading forces in battle at Yorktown. After the war, he became a lawyer and became deeply and successfully involved in the financial and legal affairs of the state of New York. He criticized the Articles of Confederation as having inherent flaws and advocated the development of a strong, centralized government. In 1784, he established the Bank of New York, which continued to operate into the twenty-first century.
A vocal and continuing critic of the Articles of Confederation, Hamilton was elected to the New York legislature in 1787 and was selected as a delegate to the Philadelphia constitutional convention. His authoritarian philosophy resulted in his call for a president and senate elected for life and for state governors to be appointed by the federal government. Although Hamilton did not prevail on these points, he did support the U.S. Constitution that emerged from the meeting. Along with James Madison and John Jay, Hamilton argued the case in favor of ratification through a series of essays known as The Federalist (1787-1788); Hamilton wrote 60 percent of the essays that supported the new constitution, which was adopted.
First Secretary of the Treasury
Hamilton served President George Washington as the first secretary of the Treasury from September 11, 1789, until his resignation on January 31, 1795, when he was succeeded by Oliver Wolcott, Jr., of Connecticut, who had served under Hamilton as auditor and controller. Hamilton’s achievements as the secretary of the Treasury were foundational.
Although he faced relentless opposition from Secretary of State Thomas Jefferson and Congressman Albert Gallatin of Pennsylvania, he succeeded in the development of a powerful federal agency and clarified its role in national affairs. Hamilton was interested in establishing a solid currency, good credit, and using the Treasury for the economic development of the nation. Unlike Jefferson with his notion of an agrarian society, Hamilton believed in commerce and capitalism and measured a society’s status because of its economic power. He initiated a process of submitting reports to the Congress; through these reports on credit, a mint, taxes, and manufacturing, he created a centralized focus for the discussion of the economy. Jefferson and Madison denounced this procedure but could not contain it.
Hamilton’s initial problem was the war debt crisis; he was determined to pay the debt incurred by the American Revolution in full. He was criticized as supporting the currency speculators who bought much of the debt from soldiers, businesses, and others in anticipation that they would make a windfall profit because his plan resulted in significant profits for these speculators. However, by paying the debt in full, Hamilton established credit and credibility for the United States among the European powers during the difficult and unpredictable years of the French Revolution. Through custom duties and excise taxes, he established a process for repayment and, in 1791, set up the First Bank of the United States as a clearinghouse for receipt and disbursement of funds and to print and circulate paper money.
In 1792, Hamilton proposed the creation of the United States Mint under the jurisdiction of the Treasury department. He was defeated by Jefferson and his emerging anti-Federalist allies; the U.S. Mint was established but placed under Jefferson’s Department of State. In 1794, Hamilton supported the suppression of the antitax Whiskey Rebellion in Pennsylvania.
Return to Private Life
During his years as secretary of the Treasury, Hamilton had an affair with Maria Reynolds; this relationship was eventually made public, and Hamilton made a public confession. In late 1794, Hamilton’s reputation was in decline because of the affair, and he needed to return to private business to restore his personal finances. At the beginning of the following year, he resigned from the Treasury but remained a trusted confidant and adviser to Washington. After Washington’s departure from office, Hamilton was isolated from both the Federalists under John Adams and Jefferson’s Anti-Federalists.
Ambrose, Douglas, and Robert Martin. The Many Faces of Alexander Hamilton: The Life and Legacy of America’s Most Elusive Founding Father. New York: New York University Press, 2007. This study focuses on unraveling the many questions that have been associated with the enigma of Alexander Hamilton.
Chernow, Ron. Alexander Hamilton. New York: Penguin Press, 2004. A comprehensive and very reliable biography in which Hamilton’s strengths and weaknesses are considered at length.
Harper, John Lamberton. American Machiavelli: Alexander Hamilton and the Origins of U.S. Foreign Policy. New York: Cambridge University Press, 2007. Harper advances a sympathetic interpretation of Hamilton as secretary of the Treasury and the influence he had on the formulation of U.S. foreign policy during Washington’s presidency.
Knott, Stephen F. Alexander Hamilton and the Persistence of Myth. Rev. ed. Lawrence: University Press of Kansas, 2005. A critical and balanced interpretation of Hamilton and his role in establishing the banking and financial system of the United States.
Murray, Joseph A. Alexander Hamilton: America’s Forgotten Founder. New York: Algora, 2007. Generally a sympathetic analysis of Hamilton’s character and contributions in the establishment of the American republic and the formation of early national policies.
Randall, Willard Sterne. Alexander Hamilton, A Life. New York: HarperCollins, 2003. Randall advances a heroic portrait of Hamilton who succeeds in and out of office in spite of the opposition of others who are not his intellectual equal.
Wright, Robert E. Hamilton Unbound: Finance and the Creation of the American Republic. Westport, Conn.: Greenwood Press, 2002. This is an essential resource in gaining a comprehensive understanding of Hamilton’s contributions and impact on banking and finance during the initial years of the American republic.
See also: Annapolis Convention; Clay’s American System; Federal monetary policy; Revolutionary War; United States Department of the Treasury; Whiskey tax of 1791.
Currency: The New Republic
First Bank of the United States: Political Parties Emerge
First Bank of the United States: Sectional and Political Controversy
Whiskey tax of 1791