Alexander Hamilton can truly be called the father of American capitalism. Whether or not one approves of the capitalist system, it was still a great achievement by that most controversial of the founding fathers. His achievement as first secretary of the Treasury was to create a stable and sound federal financial system, without which the economic development of America would have been severely hampered.24
Alexander Hamilton was born in the West Indies, had questionable parentage, but through benefactors made his way to America. He eventually married well, became an officer in Washington's army, and was a valued military thinker. Following his service in the revolution, Hamilton practiced law in New York and founded the Bank of New York, which still functions and is the oldest bank in the country. During that time he was one of the "nationalists" who believed that the Articles of Confederation needed to be revised to strengthen the national government, and helped get the Constitutional Convention off the ground. He was an active delegate from New York at the Convention and was the only signer from that state. During ratification he authored several of the Federalist Papers, aimed at leaders in his own state who were opposed to the Constitution. That state ratified by a vote of 30-27, and it is safe to say that Hamilton was indispensable in that narrow victory.
Washington named his former lieutenant as Secretary of the Treasury, a post from which he managed to get the country under its new Constitution off on a sound financial basis. He did that in large part by getting the wealthy members of American society behind the new government. He was severely criticized for so doing, both then and later, but the fragile nature of that first attempt at a new republic suggests that it needed all the help it could get. Hamilton is as responsible as anyone for its survival.
One of Hamilton's first acts was to assume all the remaining outstanding state debts under the federal government and fund them at 100 percent of their original value. That brought profits to wealthy speculators who had bought up government paper at bargain prices, but it also built confidence in the soundness of the government and gave influential people a heavy stake in its success. It also created bitterness among the less wealthy who had sold their government bonds at considerable discounts.
Hamilton also argued that the nation needed a national bank. Although Washington sought Jefferson's opinion (and the latter was strongly opposed), he went along with Hamilton and the bank was created. It will become a recurring issue as we go forward into the 1800s. Hamilton also issued reports in support of creating a national mint for coinage and supporting manufacturing as a means of advancing America's fortunes. Hamilton's exhaustive work—his reports totaled 140,000 words—helped establish the financial foundations of the United States. (Note: Chief Justice John Marshaii iater used Hamilton's "necessary and proper" arguments in the case of McCulloch v. Maryland in upholding the constitutionality of the National Bank.)
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