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Alexander Hamilton: At a Glance

Updated on January 4, 2017
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J. Schatzel works in agricultural/occupational medicine in rural upstate NY and has a Masters degree in history.

Hamilton: Politics, Economics, Ideoplogies

Similarly to George Washington, Hamilton believed that the United States should maintain an unquestionable position of aloofness from foreign politics and avoid participation in foreign conflicts to enable conditions favorable to trade. Likewise, Hamilton agreed with Washington's belief that the US should increase American influence throughout the western world through a resistance to foreign power. Hamilton was an active patriot of the revolution because he felt that England had "attempted to wrest from us those rights without which we must have descended from the ranks of freemen" and that England treated Americans not as equal citizens of the mother country, but as a distant second class of citizens. His patriotism was not an act of defense of democracy, or a quest for self-taxation, it was instead a measure towards relinquishing the colonies from what Hamilton believed to be an unjust government. Contrary to the beliefs of other founding fathers such as Thomas Jefferson, Hamilton feared that democracy, being power in the hands of incapable masses, was "our real disease.” [1] Historian Robin Brooks contends that the "Hamilton Myth" which glorifies Hamilton as one of our nation’s great founders, and through which historians have portrayed Hamilton as an epic hero, have developed only subsequent to the "federal ship" entitled "Hamilton" taking the place of pride in the new York City Victory Parade upon the ratification of the constitution. [2]

Alexander Hamilton served as the first Secretary of the Treasury under George Washington, and was directed by the House of Representatives to develop a plan to relieve the American debt crisis, which followed the Revolutionary War. The debts of the war left an excess of eighty million dollars in debt on the shoulders of the young nation; which Hamilton’s “Report Relative to a Provision for the Establishment of Public Credit” of January 1790 sought to alleviate. [3] Hamilton believed that the use of higher taxes earmarked by congress could pay debts and their respective interests sooner, however he understood that a lack of public credit and resulting inability to pay higher taxes would hinder such a plan. Through his report, Hamilton established a “shrinking fund” systen, based on revenues and payment abilities, to relieve the Revolutionary War debt within twenty four years. [4] Hamilton's shrinking fund and tontine proposal of his 1790 report were derived from respectable financial sources, such as Prime Minister William Pitt's Tontine of 1789. As a fiscal policy maker, Hamilton "derived a good many ideas from England" according to historian Robert Jennings. Through such measures, Hamilton gained a reputation as an advocate of perpetual public indebtedness, for his idealistic economic suggestions that in reality could not be accomplished. Through his report’s taxation to pay foreign and domestic war debts, state debts, and defaulted interest, Hamilton was feared by Jefferson to be a proponent of what Jefferson called “perpetual indebteness.” According to Jennings, Hamilton’s goal of converting old debt into new debt through such a system of earmarks reflects Hamilton’s preoccupation with English public finance models. [5]

In December of 1790, Hamilton proposed the establishment of a National Bank, the Bank of the United States. Hamilton’s nationalist vision is shown through his proposed policies to tie the wealthy elite to the funding of national debt and the establishment of a national bank to enhance what historian Donald Swanson identified as the “power and prestige” of the new nation’s federal government. Hamilton understood that the establishment of a national bank would lead to an increase in public credit, which would further aid in his system of debt alleviation to continue to rollover American debt from one generation to another in a perpetual system of debt conversion; with the national bank serving as a vehicle for his financial system. [6]

According to historian Albert bowman, Hamilton "preferred to submit to humiliating British demands rather than to incur a hypothetical risk of war with that country. British trade was the main support of Hamilton's controversial fiscal system." [7] Bowman contends that Hamilton was pro-England and anti-France due to their political climates during the 1790s, and because France had won favor of Americans instead off England, Hamilton advocated a position of neutrality to counter pro-French sentiments which might hinder British-American trade relationships. [8] Such practices by Hamilton lead Bowman to surmise, "Hamilton was a philosophical monarchist and a practical mercantilist." [9]

In a proclamation of neutrality, George Washington’s Farewell Address, which was written and edited largely by Alexander Hamilton, [10] Hamilton reflected his understanding that to financially support the French revolution would mean the loss of British trade, which served as a major means of income to allow the US to hold its own public credit. With a loss of public credit would come what historian Samuel Bemis recognizes as the "collapse of the newly established nationality of the United States." Hamilton wrote the farewell Address with the same language as the federalist papers. According to Bemis, "Of Washington were the trunk and branches of the sturdy tree. The shimmering foliage dancing and shining in the sunlight was Hamilton's." In a similar sentiment of neutrality, Hamilton encouraged Washington to ratify the 1782 treaty of peace and independence between America and England known as Jays Treaty. [11]

Even after the American Revolution, America continued to be a customer of English goods, despite American freedom to trade with any country and manufacture its own goods. Thus, according to English Political Historian John Davidson, perpetuating the colonial system of monopoly. English imports to the United States more than doubled between 1771 and 1798, from 3,064,843 pounds to 6,507,478 pounds per year. Likewise, the United States were exporting nearly 600,000 pounds worth of exports more to England in 1780, than they had in 1773. As Davidson notes, losing subjects did not cost England any loss in customers. [12] According to historian Samuel Bemis, Alexander Hamilton considered peace between England and the United States to be a necessity to the "newly engendered American nationality" and believed that political and resulting economic peace and stability must be encouraged through such means as allowing British navigation of the Mississippi river for trade purposes, as article 8 of the treaty allows, stating: "The Navigation of the Mississippi, from its source to the ocean, shall remain free and open to the subjects of Great Britain and the Citizens of the United States." Hamilton felt that the United States would undoubtedly allow free trade between the United States and England with Native Americans on both sides of the border line, and would expect England not to interfere in such trade relations as a matter of "free intercourse" (which he expressed to George Hammond, the British minister at Philadelphia, who articulated the ideas of Hamilton in a letter to Lord Grenville in July of 1792). Hamilton believed that it was best to share the defense and the navigation of the Mississippi River with England regardless of negotiations between the United States and Spain at the same time; as Spanish officials were undoubtedly aware of the provisions in the treaty, [13] such as Spanish secretary of state for foreign affairs Manuel de Godoy.[14]

Hamilton was feared by many anti-federalists, who felt his proposed system of ideal government in which power rested with an elite minority was designed to strip them of the "power of purse" and to prevent the common majority of citizens from usurping the power and authority of the administration. Thomas Jefferson felt the success of Hamilton's proposed political system was incompatible with republican government, in which the interests of all citizens are equally represented. Hamilton opposed American feelings of solidarity with France during the French revolution in fear that such sentiments would hinder American revenue by discouraging British-American trade. Just as Hamilton opposed the formation of international alliances, which might cause a division of nations, Hamilton opposed the alliance of citizen interests into political parties, which might in effect split the young nation. Hamilton stated, “The plan of the government and the Federalist Party, has been to avoid becoming a party.” [15] Throughout the first of The Federalist Papers, Hamilton expressed his belief in the links between philanthropy and liberty, and the need for a constitution reflective of such links; stating such remarks as "this idea, by adding the inducements of philanthropy to those of patriotism, will heighten the solicitude which all considerate and good men must feel for the event. Happy will it be if our choice should be directed by a judicious estimate of our true interests uninfluenced by considerations foreign to the public good... in its discussion of a variety of objects extraneous to its merits, and of views, passions, and prejudices little favorable to the discovery of truth..." In the thirty-third of The Federalist Papers, Hamilton stated that government "is only another word for political power and supremacy." [16]

Hamilton was distrustful of democracy due to the "unpropertied mass of the people," and his belief that the "rich and well born" were virtuous and more capable of being entrusted with political power over the masses. He believed in the need for separation of powers, as well as the need for representatives of the people to govern for the masses incapable of democratic self rule. Hamilton also, to the horror of his anti-federalist opponents, felt that a monarch was needed as a check of federal powers, because Hamilton believed the interests of a monarch would be so closely intertwined with interest of the nation that the monarch would only have the best interest of the United States in mind. Hamilton believed that without a monarch’s check of power, that American government "if in the hands of the many, they will tyrannize over the few." Unable to convince Americans of his supposed need for an American monarch, and dissatisfied with the Constitution’s provision for “commercial interests,” Hamilton felt that under the circumstances, the Constitution was the most comprehensive that could be drawn up under present circumstances. [17] Hamilton’s ideological "duels" with Thomas Jefferson regarding what historian Thomas Govan contends to be the rule of the "favored few" amidst democratic principles of self government, expressed Hamilton’s fear that a confederation government would "trample upon the liberties of the people" destroying liberty by usurping power. [18] Alexander Hamilton feared American democracy would lead to mob rule, anarchy, war, and inevitable dictatorship. Hamilton felt that the French Revolution was confirmation that given power, citizens of a nation in control leads to initial anarchy and imminent eventual despotism. [19]

Historian Jacob Cooke contends that Hamilton's political philosophy favored a dictatorship or a monarchy rather than a republican or democratic system, due to Hamilton's conviction that self rule would lead to tyranny and oppression and require intervention by the elite he believed should be given the power to begin with. The American elite are referred to as "the man on horseback" in the Caesar Letters, presumed to have been written by Hamilton. The Caesar Letters appeared in the New York Daily Advertiser on July 21, 1787, voicing contempt and distrust of the authority of the people through the conclusion that only those with "good education" of the elite and thus the propensity for "deep reflection" could rule the nation. The Caesar Letters opposed the concept of the "Majesty of the multitude" as Hamilton did, although Cooke admits there is no conclusive evidence that Hamilton wrote the Caesar letters, and that their speculative authorship is validated by their opposition to a series of letter published by Hamilton's rival George Clinton under the pseudonym "Cato." [20]

Historian Cecelia Kenyon contends that Alexander Hamilton could not reconcile his conflicting views that public good trumps private good, and that morally and politically, the public good often conflicted with private good. As a result, Kenyon argues that Hamilton’s political views are idealistic and lacking logical realism, despite his pessimistic views of human nature and firm belief in the private good as the "dark side of humanity." In a 1787 speech, Hamilton conveyed his wish that Americans would be loyal to the union above the states, acknowledging public over private good, and Hamilton acknowledged the underlying "imprudence of the people." Due to such imprudence, Hamilton used the speech to call for checks of power of the people by a head of government, such as a monarch. Hamilton believed that political power was better deserving to the hands of the rich and wellborn, instead of the masses of the common people, believing that the upper class should be a guardian of public power because it was more fit for governing than lower class majority. Using such means as the speech, The Federalist Papers and the “Caesar letters” as an appeal to reason, Hamilton wished to explain his expectation that citizens would give of themselves regardless of cost to protect public good; "Hamilton's Ideal." [21] Historian William Smith contends that Hamilton and Jefferson were amidst an ideological "battle for the soul of a nation," as Hamiltonian politics held a tone of elitism; as evidenced through Hamilton’s statements such as "Sir, your people is a great beast," in response to question of distrust of the American people in control. [22] Hamilton's conception of human nature was radically liberal, predicated upon such ideologies as Locke's theory of liberty, Hobbes theory of power, and Machiavelli's concept of the "effectual truth," stressing the relationship between private self-interest and republican government’s focus on public good rooted in Christian philanthropy, and a sense of classical nobility. Hamilton's ideals of liberal republicanism and the power of the educated elite were based largely on Hamilton’s understanding of liberty, nobility, philanthropy, and human nature; in repudiation of what historian Michael Rosano contends were Christian and classical republican political ideals. [23]

Hamilton encouraged the expedient advancement of American Manufacturing, [24] and was the foremost advocate of the American Manufacturing Economic Stabilization Program, known more commonly as the Society for Establishing Useful Manufactures (Hereafter referred to as SEUM) Hamilton's view of the American government’s purpose was that government is intended to protect economic interests of its citizens. Hamilton’s pre-1794 pro-importer economic ideals shifted towards an increasing support of home manufacture as the SEUM formed during the early 1790s, as international coalition to monitor tariffs and develop domestic manufacturing. The SEUM supported price levels of the market by stabilizing the demand for government bonds, providing productive outlets for surplus merchant capital, and curbing the outflow of American "securities" abroad by requiring subscriptions to SEUM stock. Hamilton wished for "incitement and patronage" of manufacturing through the intervention of the government in the marketplace, serving as the "invisible hand" to put capital in the means of manufacturers. [25] Hamilton supported technology piracy regardless of patents to enable manufacturing, and felt that technological differences between American and European manufacturers accounted for the disparity in western manufactures. [26]

According to historian Stuart Bruchey, Hamilton was "profoundly distrustful of a national bank with branches," just as he wanted a single seat at the head of government due to his distrust of the common people. In his Report on a National Bank of December 1790, Hamilton suggested a provision be created to allow bank branch formation only if they become necessary. Hamilton’s report expressed his desire that a national bank would make pre-existing local banks its agents, because branches of bureaucracy were feared by Hamilton due to his "concern for the safety of public funds.” Hamilton considered loans chartered to the SEUM to be in the public interest, and respected the value of other such bank services to the federal government. [27]

Hamilton’s “Report on Manufactures” was heavily anti-lassiez faire, encouraging government intervention on behalf of manufacturing interests, to advance American economy through such means as high duties on imported manufactured goods, and low duties on imported raw materials for domestic manufacturing. Hamilton sought a program through which surplus customs revenue could finance production bounties through such means as defraying the emigration expenses of manufacturers, and providing monetary rewards to the inventors of technological improvements. Hamilton also wished to provide government subsidies to domestic producers of coal, wool, sailcloth, cotton, and glass to encourage domestic industry. Hamilton's plan raised public distaste due to its reallocation of public funds into the hands of hands of private industries for the benefit of the companies. Although he recognized that "taxes are never welcome to a community," Hamilton recommended higher import duties to spur industrial growth in America. Manufacturers wished for higher import duties than those proposed by Hamilton’s report, however Hamilton wished to keep duties on imports modest to prevent price rises for consumers, which he feared would in turn cause further smuggling and resulting losses in government revenue. Unequal duties and taxes were viewed by Jefferson as commercial discrimination, and he wished to free American trade of impediments such as those Hamilton proposed. Historian Douglas Irwin contends that although the report was not adopted by congress, its place as a "visionary document about the economic advantages of manufacturing" and "a policy document that made specific and concrete proposals for a government action" must not be overlooked. [28]

Tench Coxe, the assistant to Alexander Hamilton as the Secretary of the Treasury, was appointed by Hamilton because as historian Jacob Cooke notes, "no American of the day was a more indefatigable advocate of Hamilton’s brand of economic nationalism than was Coxe." Hamilton was meticulous about details, and wrote many drafts of his “Report on Manufactures,” submitted to congress December 1791 to conceive and launch the SEUM, which he wrote with the extensive research and advice of Tench Coxe. The report was one of 3 major reports submitted to congress, with those regarding public credit and the national bank. To Hamilton, encouraging American manufactures was a means of establishing a national security, and Hamilton recommended raw materials for manufacturing and the tools and implements of immigrants not be taxed, to encourage American manufacturing in his advocation of industrialization; due to his perceived "indispensability of manufactures to a balanced economy." [29]

Until his death in 1804 amidst his duel with Aaron Burr, [30] Alexander Hamilton was persecuted for his criticisms of the public conduct and character of John Adams, and for his federalist views falling from favor with the increasing majority of the republican nation. [31] Hamilton was concerned with the economic aspects of the American political atmosphere in the years preceding and directly subsequent to the formation of the United States government. Although America did not wholly embrace Hamilton’s ideology of a monarch’s necessity or a branchless national bank, The United States has felt the impact of Hamilton’s theories and economic policies even as recent as the early twentieth century. According to economist Hermon Finer, even in 1926, “Hamiltonianism is entering in the shape of Civil Service reform, Commission Government in the cities, and the reformed budget system.” [32]

[1] Susan Morse. "Alexander Hamilton" Political Science Quarterly, Vol.5, No.1 (March 1890) 1-23.

[2] Robin Brooks. "Alexander Hamilton, Melancton Smith, and the Ratification of the Constitution in New York" The William and Mary Quarterly, Vol.24, No.3, (July 1967) 340.

[3]Harold Syrett (ed.) The Papers of Alexander Hamilton, 27 vols, (NY, 1961) V1, 65-66.

[4] Donald Swanson. "Alexander Hamilton’s Hidden Sinking Fund" The William and Mary Quarterly, Vol.49, No.1 (January 1992) pp.111-113.

[5] Robert Jennings. “Alexander Hamilton's Tontine Proposal" The William and Mary Quarterly, Vol.45, No.1 (January 1988) pp.107-115.

[6] Donald Swanson, "Alexander Hamilton, the Celebrated Mr. Neckar, and Public Credit." The William and Mary Quarterly, Vol.47, No.3 (July 1990) pp.422-430

[7] Albert Bowman, "Jefferson, Hamilton, and American Foreign Policy" Political Science Quarterly, Vol.71, No.1 (March 1956) 20.

[8] Ibid., 29.

[9] Ibid., 49.

[10] Nathan Schachner,."Alexander Hamilton viewed by his friends: The Narratives of Robert Troup and Hercules Mulligan" the William and Mary Quarterly, Vol.4, No.2, (April 1947) 208.

[11] Samuel Bemis. "Washington's Farewell Address: A Foreign Policy of Independence" The American Historical Review, Vol.39, No.2, (January 1934) pp. 250-251.

[12] John Davidson, "England's Commercial Policy towards her colonies since the treaty of Paris" Political Science Quarterly Vol.14, No.1, (March 1899) 39-40.

[13] Samuel Bemis, "Jays Treaty and the North West Boundary Gap" The American Historical Review, Vol.27, No.3 (April 1922) pp.465-473.

[14] Arthur Whitaker, "Godoy's Knowledge of the Terms of Jays Treaty" The American Historical Review, Vol.35, No.4 (July 1930) p.804.

[15] Joseph Charles, "The Jay Treaty: The Origins of the American Party System" The William and Mary Quarterly, Vol.12, No.4 (October 1955) 581-630

[16] Alexander Hamilton, The Federalist, (NY: Barnes and Noble Books, 2006) pp.9-11, 174.

[17] Thomas P. Govan, "Notes and Documents: The Rich, The Well-born, and Alexander Hamilton" The Mississippi Valley Historical Review, Vol.36, No.4, (March 1950) pp. 675-679.

[18] Thomas Govan, "Alexander Hamilton and Julius Caesar: A Note on the Use of Historical Evidence" The William and Mary Quarterly, Vol.32, No.3 (July 1975) 475-480.

[19] David Loth, Alexander Hamilton, Portrait of a Prodigy, (New York: Carrick and Evans Inc., 1939) p.207

[20] Jacob Cooke, "Alexander Hamilton's Authorship of the Caesar Letters" The William and Mary Quarterly, Vol.17, No.1 (January 1960) pp.78-83.

[21] Cecilia Kenyon, "Alexander Hamilton: Rousseau of the Right" Political Science Quarterly, Vol.73, Vol.2 (June 1958) pp.161-177

[22] Smith, William. "Henry Adams, Alexander Hamilton, and the American People as a Great Beast." The New England Quarterly, Vol.48, No.2 (June 1975) 216-230.

[23] Michael Rosano, "Liberty, Nobility, Philanthropy, and Power in Alexander Hamilton's conception of Human Nature" The American Journal of Political Science, Vol.47, No.1 (January 2003) p.61.

[24] Edward Bourne, "Alexander Hamilton and Adam Smith" The Quarterly Journal of Economics, Vol.8, No.3 (April 1894) p.329.

[25] "Alexander Hamilton and American Manufacturing: A Reexamination" The Journal of American History, Vol.65, No.4 (March 1979) 971-995.

[26] Doron BenAtar, "Alexander Hamilton's alternative: Technology Piracy and the report on manufactures" The William and Mary Quarterly, Vol.52, No.3 (July 1995) pp.389-400.

[27] Stuart Bruchey, "Alexander Hamilton and the State Banks, 1789-1795" The William and Mary Quarterly, Vol.27, No.3 (July 1970) pp.348-378.

[28] Douglas Irwin. "The Aftermath of Hamilton's "Report on Manufactures"" The Journal of Economic History, Vol.64, No.3 (September 2004) 800-820.

[29] Jacob Cooke, "Tench Coxe, Alexander Hamilton, and the Encouragement of American Manufactures” The William and Mary Quarterly, Vol.32, No.3, (July 1975) 370-380.

[30] Harry MacNeill, "Life Portraits of Alexander Hamilton" The William and Mary Quarterly, Vol.12, No.3 (July 1955) 509.

[31] Dumas Malone. "The Threatened Persecution of Alexander Hamilton under the Sedition Acts by Thomas Cooper" The American Historical Review, Vol.29, No.1 (Oct. 1923) 76-81.

[32] Hermon Finer, "Jefferson, Hamilton, and American Democracy" Economica, No.18, (November 1926) 338-344.

Special Thanks

Special Thanks to Hartwick College, Oneonta NY, for the use of their beautiful library!
Special Thanks to Hartwick College, Oneonta NY, for the use of their beautiful library!

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