Introduction
Alexander Hamilton was an important political figure who was honored with a high position in government. In many ways, Hamilton’s ideas for financial planning were inventive because they offered new ways to solve pressing problems. In addition, the financial solutions proposed were capable of changing the economic fortunes of an independent America that was unable to meet its debt obligations. Creating a national bank was a controversial but subsequently brilliant idea that changed America’s view of the economy.
Hamilton’s financial plans
Hamilton had inventive financial ideas that America needed after independence because it was not paying its debts. The value of these government securities was zero, but Hamilton had a solution. He suggested that the federal government pay off all the national debts at their total value (Stringham 525). This redemption would be an effective way to legitimize the federal government. The means of financing the repayment included issuing new securities to investors (Hamilton, “Final Version of the Second Report…”). Investors were good with new ideas because they would generate significant profits. Hamilton was also instrumental in creating a national bank and a centralized currency.
Hamilton’s plan for the new country’s financial system had three main parts. Taking on the states’ debts by issuing interest-bearing bonds was the first part of the plan. Hamilton also imposed tariffs on imported goods as a way of increasing federal revenues and helping domestic businesses. By establishing a new national bank, Hamilton gave the United States the ability to hold funds and use securities as capital to encourage future growth (Hamilton, “Final Version of an Opinion…). Hamilton created three different reports outlining his program and proposals. These were the first public credit report, the second public credit report, and the manufacturing report (Hamilton, “Final Version of the Second Report…”). The battles over Hamilton’s recommendations led to the formation of the federalist and republican parties. Hamilton called for a strong nation that commanded the respect of fellow citizens and abroad. He believed in economic planning, industrial economics, and elite rule.
Hamilton’s financial plans were ingenious, but they still contained contradictory elements. The most controversial idea was the creation of a national bank, which would have created a system of the centralized federal credit. The bank would have allowed the government to manage its accumulated debt and use it as it saw fit (Hamilton, “Final Version of an Opinion…). The national bank was contrary to the proposed Constitution: it did not consider it, making the bank practically an outlaw. It would have eliminated all control over the financial situation because the people would not have had the ability to influence economic decisions.
However, the National Bank, now called the First Bank of the United States, brought positive things to the U.S. economic system. National credit now allows the country to be at the top of the world market. In addition, the principles laid down by Hamilton for the export and import of goods, as well as their taxation and protective tariffs, continue to have a place in today’s economy (Stringham 528). His rules for monetizing southern industries and establishing economic pathways have pushed the U.S. toward collective government financial literacy.
Conclusion
Thus, Alexander Hamilton’s financial plans contained ideas for a stable U.S. financial system. They included the issuance of interest-bearing bonds, protective tariffs on imported goods, and the creation of a National Bank. Although the bank was Hamilton’s most controversial idea, it violated the Constitution and unleashed the government; it created America’s greatest idea. Today, elements of Hamilton’s financial plans live on national credit, established economic ways, taxation and currency.
Works Cited
Hamilton, Alexander. “Final Version of the Second Report on the Further Provision Necessary for Establishing Public Credit.” National Archives and Records. Administration. Web.
Hamilton, Alexander. “Final Version of an Opinion on the Constitutionality of an Act to Establish a Bank.” National Archives and Records Administration. Web.
Stringham, Edward Peter. “Hamilton’s Legacy and the Great Man Theory of Financial History.” The Independent Review, vol. 21, no. 4, 2017, pp. 523–533.