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Hamilton's Economic Plan
Alexander Hamilton was one of the Founding Fathers, and was the first Secretary of the Treasury. His economic plan was contained in a series of written works that provided the framework for the nation's economic governance. The underlying objectives of Hamilton's economic plan were to provide the nation with the financial stability it would need in case of war, and was also driven by his Federalist viewpoint, in direct contrast to the many anti-Federalists of the time (SparkNotes, 2015).
The first element of Hamilton's plan was with respect to the pending credit crisis that the new country was to have. As a new country, America had no reputation to draw on with respect to credit. The nation's debts were large and largely unpaid. Roughly half of this debt was owed by the states. Hamilton suggested public bonds as a means of financing wars in particular, but as a means in general of consolidating these debts in order to maintain the nation's good credit standing. He recognized the necessity for this structure because at the time America "is possessed of little active wealth, or in other words little monied capital." Thus, he continued "to be...
This idea was met with resistance, because while the South had generally paid off most of its debts, the north was still heavily indebted, and this sharing of the burden at this time would essentially punish the South for its diligence.
The second component of Hamilton's economic plan, in the Second Report on Public Credit, was to establish a national bank. The objective was to increase the amount of capital for investment, the Bank of the United States. The bank would be 80% owned by private interests, but would take in federal revenue, and issue currency. This bank would also act as a regulatory agent, with respect to all other banks in the country, and would extend credit to citizens. Thus, this bank would be both a retail bank and a central bank, a fairly unique structure. A private retail bank would thus be competing with its main creditor and its main regulator, both the same entity. On top of this, the bank doing this would be 80% privately-owned. Such a structure had too many similarities to the Bank of Britain,…
References
SparkNotes (2015). Building the state 1781-1797. SparkNotes. Retrieved May 11, 2015 from http://www.sparknotes.com/history/american/statebuilding/section9.rhtml
Hamilton, A. (1790) First report on the public credit.
Hamilton, A. (1790) Second report on the public credit.
Hamilton, A. (1791) Report on manufactures.
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