Alexander Hamilton, alongside such luminaries as Benjamin Franklin, George Washington, Thomas Jefferson, John Adams and James Madison is rightly considered as a founding father of the United States of America. In the second half of the eighteenth century, when British colonies in America entered a period of fervent political change, intellectuals such as Hamilton played pivotal roles in guiding and influencing this process. This essay will argue the following thesis: Not only was Alexander Hamilton the leading contributor to the Federalist Papers, he had also played a pivotal role in the establishment of U.S. Treasury and his ideas continue to influence economic policy even today.
Although lesser studied when compared to other Founding Fathers, Hamilton’s contribution in shaping the new American republic is substantial. For example,
“The most practical nation builder of the Founding Fathers, Hamilton (1755-1804) fought tirelessly for ratification of the Constitution, played a pivotal role in creating a centralized and powerful nation-state, and argued persuasively for a strong presidency and an independent judiciary. It was Hamilton, at the beginning of the nation’s history, who provided a prophetic vision of the United States as a global power stabilized by capitalism and with a military second to none.” (White 2000, 186)
When one makes an analysis of Hamilton’s biography, some pertinent links between his childhood experience and later political development can be made. Even going by the upbringing standards of the late 18th century, Hamilton has had a chaotic and tumultuous early life. The discord and separation between his parents Rachel Faucett Lavien and James A. Hamilton; and the fact that he was an illegitimate child seemed to have left a profound mark on the formative psyche of young Alexander Hamilton. Having been brought up by his mother during his early years, he was adopted by his cousin upon her sudden demise in 1768. But his cousin Peter Lytton too committed suicide subsequently, essentially leaving Hamilton as an orphan. It is perhaps, these traumatic early events in life which shaped Hamilton’s view of family and society and drew him closer to capitalist ideology and the material security it promised. Seen in this backdrop, it is easy to understand some of Hamilton’s later political ideas, especially in the domain of economic systems and the role of the treasury. (Sylla, et.al., 2009, p.61)
While Hamilton contributed to all aspects of government formulation, he is best remembered for his role in designing the young nation’s economic system. During and after his lifetime Hamilton was overshadowed by his more popular adversary Thomas Jefferson. While Jefferson’s dominant image persists today, “the irony is that Hamilton’s concept of the federal government, not Jefferson’s, is what has evolved and endures” (White 2000, 186). This is particularly valid with respect to the country’s economic system and the organization of its constituent agencies such as the U.S. Treasury. Hamilton could rightly be considered a visionary, who saw the importance of economic growth and technological innovation. His state papers on the subject of economy is considered by modern scholars to be a monumental effort “toward establishing a rational basis for planning and legislation; his Report on Manufacturers and his advocacy of federal public works are remarkably modern descriptions of the relationship between government and technology” (White 2000, 186).
Again, when one looks for reasons for Hamilton’s high erudition, it is available in his childhood years. In the Caribbean Islands where he spent most of his early years, the overall standard of education and culture is not advanced, as these islands were primarily exploited as arable plantation lands. Added to this disadvantage, Hamilton’s parents and guardians were also not a constant in his life. In this climate, his private collection of thirty odd Greek and Roman Classic works of literature served as education, entertainment and solace. And this strong foundation in the classics partially explains the breadth and depth of Hamilton’s political thought during his later career. This is best reflected in his role as the first Secretary of the Treasury and the unofficial aide to George Washington. (Miller, 1959, p.65)
In his capacity as the Secretary of Treasury, Hamilton was instrumental in designing the American bureaucracy, which prevails even to this day. In his unofficial capacity as the confidante and aide of the first President, Hamilton also wrote many of the Presidential addresses, most notable of which is the Farewell Address delivered by Washington at the end of his second term. Hamilton’s contribution to the development of the economic system is more profound though. Inspired by such economic thinkers as Postlethwayt, Richard Price, Adam Smith and Wyndham Beawes, Hamilton strongly supported a market-based economy in which private enterprise would be encouraged. (White 2000, 186)
The growth trajectory of the American economy in the last two centuries will reinforce the lasting legacy of Hamilton’s ideas. Firstly, the financial panic of 1792 was largely withstood due to the safety mechanisms already put in place by him as Secretary of the Treasury. The policies of economic nationalism proposed by Hamilton had been pivotal in the United States catching up leading economies of the nineteenth century like Britain. By the time Hamilton’s term as Secretary of Treasury was completed in 1795, the United States economy was comprised of six crucial institutional elements that continue to shape contemporary economic outcomes as well. These are “stable public finances and debt management; stable money; an effective central bank; a functioning banking system; active securities markets; and a growing number of business corporations, financial and non-financial”. (Rust, 1999, 46)
Such economic foundations laid by Hamilton also contributed to lifting agrarian and backward regions such as the American South and West toward industrialization. The effects are easy to see, as by the end of the nineteenth century, the South was home to several manufacturing industries. One could trace the eventual economic and industrial development of the United States to the reports Hamilton presented to the Congress in his capacity as the Secretary of Treasury. His key insights in matters of public credit, manufacturing and national banking would transform the country’s economy from agrarian to industrial. (Rust, 1999, 46)