Hamil­ton’s role in Amer­ica’s econ­omy

New Haven Register (New Haven, CT) - - BUSINESS - Eric Tash­lein Con­necti­cut Money Eric Tash­lein is a Cer­ti­fied Fi­nan­cial Plan­ner pro­fes­sional and found­ing Prin­ci­pal of Con­necti­cut Cap­i­tal Man­age­ment Group LLC, 67 Cherry St., C-2, in Mil­ford. He can be reached at 203-877-1520 or through www.con­necti­cut­cap

The Broad­way play “Hamil­ton: An Amer­i­can Mu­si­cal” is a ma­jor hit, with a sec­ond na­tional tour planned for 2018 and a film adap­ta­tion in the works. The sold-out show retells the story of Alexan­der Hamil­ton, the na­tion’s first sec­re­tary of the Depart­ment of the Trea­sury, from a modern per­spec­tive com­plete with rap mu­sic and a di­verse cast. While the show em­pha­sizes Hamil­ton’s suc­cess as an im­mi­grant from the West Indies, it also ad­dresses the vi­tal role he played in es­tab­lish­ing Amer­ica’s eco­nomic sys­tem. Af­ter serv­ing as an aide to Gen­eral Ge­orge Wash­ing­ton dur­ing the Amer­i­can Rev­o­lu­tion and as a del­e­gate to the Con­sti­tu­tional Con­ven­tion, Hamil­ton be­came the na­tion’s first Trea­sury sec­re­tary in 1789.

Af­ter ar­riv­ing in Amer­ica in 1773 as a pre­co­cious 16-year-old to en­roll in what is now Columbia Univer­sity in New York, Hamil­ton be­came ac­tive in the Rev­o­lu­tion. Dur­ing its first decade, the new coun­try was plagued by trade and eco­nomic prob­lems be­tween the states and dif­fi­cul­ties rais­ing rev­enue to pay off war debts. Hamil­ton and other Fed­er­al­ists pushed for a stronger cen­tral gov­ern­ment, which re­sulted in the U.S. Con­sti­tu­tion and the cre­ation of a chief ex­ec­u­tive, courts and tax­ing pow­ers.

In his six years as Trea­sury sec­re­tary, Hamil­ton left a strong mark on the na­tion’s eco­nomic fu­ture, in spite of op­po­si­tion by Thomas Jef­fer­son and other pro­po­nents of state’s rights and in­di­vid­ual rights.

In fact, Hamil­ton’s quest to es­tab­lish a strong fed­eral gov­ern­ment fa­mously re­sulted in the lo­ca­tion of the na­tion’s cap­i­tal on the Vir­gini­aMary­land bor­der. Hamil­ton wanted his newly formed Trea­sury depart­ment to take over state debts, as a first step to­ward build­ing a fis­cally strong na­tion, and South­ern leg­is­la­tors were block­ing the plan. At the same time, North­ern leg­is­la­tors fa­vored New York as the na­tion’s cap­i­tal and blocked a plan by South­ern­ers to place the cap­i­tal on the Po­tomac River. The Com­pro­mise of 1790 gave each side what it wanted.

The re­sult­ing Fund­ing Act of 1790 al­lowed the United States fed­eral gov­ern­ment to es­tab­lish credit on the in­ter­na­tional stage. The Trea­sury depart­ment took over the Rev­o­lu­tion­ary War debts of states that had not yet paid those debts, and is­sued bonds to wealthy Amer­i­can cit­i­zens to pay them off. A tar­iff on im­ports raised money to pay the bond­hold­ers. The plan meant that for­eign govern­ments would ac­cept U.S. credit, in light of fed­eral tax­ing power, and both the Louisiana Pur­chase in 1803 and the War of 1812 were fi­nanced by money bor­rowed from Europe. It also gave the wealthy bond­hold­ers a stronger stake in the suc­cess of the na­tion. Hamil­ton also es­tab­lished a na­tional bank, and his ef­forts boosted the growth of the nascent U.S. stock mar­ket.

De­spite his ac­com­plish­ments, Hamil­ton suf­fered an un­for­tu­nate fate in 1804. A long-stand­ing feud with Vice Pres­i­dent Aaron Burr ended with a duel in which Hamil­ton was killed, a dra­matic story that tends to move the fo­cus away from his cen­tral role in pro­vid­ing a strong foun­da­tion for the U.S. econ­omy.

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