![\"Alexander](\"http:\/\/www.americanyawp.com\/text\/wp-content\/uploads\/hamilton_1806.jpg\")
<\/a> Alexander Hamilton saw America\u2019s future as a metropolitan, commercial, industrial society, in contrast to Thomas Jefferson\u2019s nation of small farmers. While both men had the ear of President Washington, Hamilton\u2019s vision proved most appealing and enduring. John Trumbull, Portrait of Alexander Hamilton, 1806. Wikimedia<\/a>.[\/caption]\r\n\r\nMeanwhile, during George Washington\u2019s presidency, political trouble was already brewing. Washington\u2019s cabinet choices reflected continuing tension between politicians who wanted and who feared a powerful national government.\u00a0 The vice president was John Adams, and Washington chose Alexander Hamilton to be his secretary of the treasury. Both men wanted an active government that would promote prosperity by supporting American industry. However, Washington chose Thomas Jefferson to be his secretary of state, and Jefferson was committed to restricting federal power and preserving an economy based on agriculture. From almost the beginning, Washington struggled to reconcile the \u201cFederalist\u201d and \u201cRepublican\u201d (or Democratic-Republican) factions within his own administration.\r\n\r\nAlexander Hamilton believed that self-interest was the \u201cmost powerful incentive of human actions.\u201d Self-interest drove humans to accumulate property, and that effort created commerce and industry. According to Hamilton, government had important roles to play in this process. First, the state should protect private property from theft. Second, according to Hamilton, the state should use human \u201cpassions\u201d and \u201cmake them subservient to the public good.\u201d In other words, a wise government would harness its citizens\u2019 desire for property so that both private individuals and the state would benefit.\r\n\r\nHamilton, like many of his contemporary statesmen, did not believe the state should ensure an equal distribution of property. Inequality was \u201cthe great & fundamental distinction in Society,\u201d and Hamilton saw no reason to change this reality. Instead, Hamilton wanted to tie the economic interests of wealthy Americans, or \u201cmonied men,\u201d to the federal government\u2019s financial health. If the rich needed the government, then they would direct their energies to making sure it remained solvent.\r\n\r\nHamilton, therefore, believed that the federal government must be \u201ca Repository of the Rights of the wealthy.\u201d As the nation\u2019s first secretary of the treasury, he proposed an ambitious financial plan to achieve that.\r\n\r\nThe first part of Hamilton\u2019s plan involved federal \u201cassumption\u201d of state debts, which were mostly left over from the Revolutionary War. The federal government would assume responsibility for the states\u2019 unpaid debts, which totaled about $25 million. Second, Hamilton wanted Congress to create a bank\u2014a Bank of the United States.\r\n\r\nThe goal of these proposals was to link federal power and the country\u2019s economic vitality. Under the assumption proposal, the states\u2019 creditors (people who owned state bonds or promissory notes) would turn their old notes in to the Treasury and receive new federal notes of the same face value. Hamilton foresaw that these bonds would circulate like money, acting as \u201can engine of business, and instrument of industry and commerce.\u201d This part of his plan, however, was controversial for two reasons.\r\n\r\nFirst, many taxpayers objected to paying the full face value on old notes, which had fallen in market value. Often the current holders had purchased them from the original creditors for pennies on the dollar. To pay them at full face value, therefore, would mean rewarding speculators at taxpayer expense. Hamilton countered that government debts must be honored in full, or else citizens would lose all trust in the government. Second, many southerners objected that they had already paid their outstanding state debts, so federal assumption would mean forcing them to pay again for the debts of New Englanders. Nevertheless, President Washington and Congress both accepted Hamilton\u2019s argument. By the end of 1794, 98 percent of the country\u2019s domestic debt had been converted into new federal bonds.\r\n\r\nHamilton\u2019s plan for a Bank of the United States, similarly, won congressional approval despite strong opposition. Thomas Jefferson and other Republicans argued that the plan was unconstitutional; the Constitution did not authorize Congress to create a bank. Hamilton, however, argued that the bank was not only constitutional but also important for the country\u2019s prosperity. The Bank of the United States would fulfill several needs. It would act as a convenient depository for federal funds. It would print paper banknotes backed by specie (gold or silver). Its agents would also help control inflation by periodically taking state bank notes to their banks of origin and demanding specie in exchange, limiting the amount of notes the state banks printed. Furthermore, it would give wealthy people a vested interest in the federal government\u2019s finances. The government would control just twenty percent of the bank\u2019s stock; the other eighty percent would be owned by private investors. Thus, an \u201cintimate connexion\u201d between the government and wealthy men would benefit both, and this connection would promote American commerce.\r\n\r\nIn 1791, therefore, Congress approved a twenty-year charter for the Bank of the United States. The bank\u2019s stocks, together with federal bonds, created over $70 million in new financial instruments. These spurred the formation of securities markets, which allowed the federal government to borrow more money and underwrote the rapid spread of state-charted banks and other private business corporations in the 1790s. For Federalists, this was one of the major purposes of the federal government. For opponents who wanted a more limited role for industry, however, or who lived on the frontier and lacked access to capital, Hamilton\u2019s system seemed to reinforce class boundaries and give the rich inordinate power over the federal government.\r\n\r\nHamilton\u2019s plan, furthermore, had another highly controversial element. In order to pay what it owed on the new bonds, the federal government needed reliable sources of tax revenue. In 1791, Hamilton proposed a federal excise tax on the production, sale, and consumption of a number of goods, including whiskey.","rendered":"![\"Alexander](\"http:\/\/commons.wikimedia.org\/wiki\/File:Alexander_Hamilton_portrait_by_John_Trumbull_1806.jpg\")
<\/a><\/p>\nAlexander Hamilton saw America\u2019s future as a metropolitan, commercial, industrial society, in contrast to Thomas Jefferson\u2019s nation of small farmers. While both men had the ear of President Washington, Hamilton\u2019s vision proved most appealing and enduring. John Trumbull, Portrait of Alexander Hamilton, 1806. Wikimedia<\/a>.<\/p>\n<\/div>\n Meanwhile, during George Washington\u2019s presidency, political trouble was already brewing. Washington\u2019s cabinet choices reflected continuing tension between politicians who wanted and who feared a powerful national government.\u00a0 The vice president was John Adams, and Washington chose Alexander Hamilton to be his secretary of the treasury. Both men wanted an active government that would promote prosperity by supporting American industry. However, Washington chose Thomas Jefferson to be his secretary of state, and Jefferson was committed to restricting federal power and preserving an economy based on agriculture. From almost the beginning, Washington struggled to reconcile the \u201cFederalist\u201d and \u201cRepublican\u201d (or Democratic-Republican) factions within his own administration.<\/p>\n Alexander Hamilton believed that self-interest was the \u201cmost powerful incentive of human actions.\u201d Self-interest drove humans to accumulate property, and that effort created commerce and industry. According to Hamilton, government had important roles to play in this process. First, the state should protect private property from theft. Second, according to Hamilton, the state should use human \u201cpassions\u201d and \u201cmake them subservient to the public good.\u201d In other words, a wise government would harness its citizens\u2019 desire for property so that both private individuals and the state would benefit.<\/p>\n Hamilton, like many of his contemporary statesmen, did not believe the state should ensure an equal distribution of property. Inequality was \u201cthe great & fundamental distinction in Society,\u201d and Hamilton saw no reason to change this reality. Instead, Hamilton wanted to tie the economic interests of wealthy Americans, or \u201cmonied men,\u201d to the federal government\u2019s financial health. If the rich needed the government, then they would direct their energies to making sure it remained solvent.<\/p>\n Hamilton, therefore, believed that the federal government must be \u201ca Repository of the Rights of the wealthy.\u201d As the nation\u2019s first secretary of the treasury, he proposed an ambitious financial plan to achieve that.<\/p>\n The first part of Hamilton\u2019s plan involved federal \u201cassumption\u201d of state debts, which were mostly left over from the Revolutionary War. The federal government would assume responsibility for the states\u2019 unpaid debts, which totaled about $25 million. Second, Hamilton wanted Congress to create a bank\u2014a Bank of the United States.<\/p>\n The goal of these proposals was to link federal power and the country\u2019s economic vitality. Under the assumption proposal, the states\u2019 creditors (people who owned state bonds or promissory notes) would turn their old notes in to the Treasury and receive new federal notes of the same face value. Hamilton foresaw that these bonds would circulate like money, acting as \u201can engine of business, and instrument of industry and commerce.\u201d This part of his plan, however, was controversial for two reasons.<\/p>\n First, many taxpayers objected to paying the full face value on old notes, which had fallen in market value. Often the current holders had purchased them from the original creditors for pennies on the dollar. To pay them at full face value, therefore, would mean rewarding speculators at taxpayer expense. Hamilton countered that government debts must be honored in full, or else citizens would lose all trust in the government. Second, many southerners objected that they had already paid their outstanding state debts, so federal assumption would mean forcing them to pay again for the debts of New Englanders. Nevertheless, President Washington and Congress both accepted Hamilton\u2019s argument. By the end of 1794, 98 percent of the country\u2019s domestic debt had been converted into new federal bonds.<\/p>\n Hamilton\u2019s plan for a Bank of the United States, similarly, won congressional approval despite strong opposition. Thomas Jefferson and other Republicans argued that the plan was unconstitutional; the Constitution did not authorize Congress to create a bank. Hamilton, however, argued that the bank was not only constitutional but also important for the country\u2019s prosperity. The Bank of the United States would fulfill several needs. It would act as a convenient depository for federal funds. It would print paper banknotes backed by specie (gold or silver). Its agents would also help control inflation by periodically taking state bank notes to their banks of origin and demanding specie in exchange, limiting the amount of notes the state banks printed. Furthermore, it would give wealthy people a vested interest in the federal government\u2019s finances. The government would control just twenty percent of the bank\u2019s stock; the other eighty percent would be owned by private investors. Thus, an \u201cintimate connexion\u201d between the government and wealthy men would benefit both, and this connection would promote American commerce.<\/p>\n In 1791, therefore, Congress approved a twenty-year charter for the Bank of the United States. The bank\u2019s stocks, together with federal bonds, created over $70 million in new financial instruments. These spurred the formation of securities markets, which allowed the federal government to borrow more money and underwrote the rapid spread of state-charted banks and other private business corporations in the 1790s. For Federalists, this was one of the major purposes of the federal government. For opponents who wanted a more limited role for industry, however, or who lived on the frontier and lacked access to capital, Hamilton\u2019s system seemed to reinforce class boundaries and give the rich inordinate power over the federal government.<\/p>\n Hamilton\u2019s plan, furthermore, had another highly controversial element. In order to pay what it owed on the new bonds, the federal government needed reliable sources of tax revenue. In 1791, Hamilton proposed a federal excise tax on the production, sale, and consumption of a number of goods, including whiskey.<\/p>\n\n\t\t\t Candela Citations<\/h3>\n\t\t\t\t\t
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