Alexander Hamilton Establishes the US Economy

Hamilton in the Trenches

While serving under General Washington, Hamilton recognized that money was a key to the success of the new nation. Under the Articles of Confederation, the government did not have the power to tax citizens to support the army. This led to shortages of food and other supplies.

Alexander Hamilton to François, the Marquis de Barbé-Marbois

A year before the surrender of Cornwallis in 1781, Hamilton feared that the United States would not win the war. He blamed Congress’s inability to raise funds for the army for the dire circumstances: “The want of money makes us want everything else.”

Alexander Hamilton’s Report on Public Credit

Hamilton’s Report on Public Credit laid the groundwork for the nation’s economic future. The report analyzed the financial standing of the country and made recommendations to improve its credit rating internationally. To accomplish this, he devised a plan for the federal government to assume the Revolutionary War debts owed by the states.

The Bank of the United States in 1800

Pictured here is the facade of the Bank of the United States in Philadelphia in 1800. Like other important government buildings, the building was modeled on the architecture of ancient Rome. The style reinforced the the link between the Roman republic and the new American republic.

Currency Issued Rhode Island

Until 1789 states and banks could issue their own money. It was chaotic and unreliable. Money issued in one state might not be accepted in another, and a pound in one state might not equal a pound elsewhere. The Bank of the United States solved this problem by printing money that would be accepted equally in all the states.

Alexander Hamilton on the Constitutionality of the Bank, 1791

Republicans such as Thomas Jefferson objected to the Bank of the US. They claimed its creation was outside of the powers granted by the Constitution. Hamilton skillfully argued for the bank by saying it was part of the implied powers that were necessary to run the government.

Nathaniel Gorham to Henry Knox, January 20, 1790

Bostonian Nathaniel Gorham wrote to Secretary of War Henry Knox to warn him that many feared that the assumption of debt would result in heavy property taxes. Gorham believed that these rumors would lead to the defeat of the plan. He suggested that Hamilton change his wording to alleviate these fears.

Alexander Hamilton on the Creation of the Mint

In January 1791, Treasury Secretary Hamilton published a detailed plan for the national mint. He argued that standard coins and paper money printed by the mint would benefit all citizens.

1793 Pennies

In 1793, the first US pennies were produced by the mint in Philadelphia. The public disliked this first design, so a second design was issued the same year.

Passaic Falls, New Jersey

In 1791, Hamilton helped found the Society for Establishing Useful Manufactures. The Society planned to use the falls to develop Paterson, New Jersey, as an industrial city with workshops that would produce everything from hats to iron wire.

Alexander Hamilton’s Report on the Subject of Manufactures

In a 1791 report to the House of Representatives, Hamilton proposed high tariffs designed to protect American industry from foreign competition. He also advocated internal improvements and a better transportation system, hoping to break Britain’s manufacturing hold on the United States.

Portrait of Alexander Hamilton by Jonathan Trumbull

Hamilton foresaw a nation of free people and free labor. He introduced a plan of gradual emancipation of slaves owned by the members of the Manumission Society and lobbied to end the slave trade in New York.

Act for the Gradual Abolition of Slavery, 1799

When John Jay, one of the founders of the New York Manumission Society, was governor, New York state finally passed legislation regarding the emancipation of slaves. The 1799 Act for the Gradual Abolition of Slavery stated that children born into slavery after July 4, 1800, would be emancipated in their mid-twenties.