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Constitutional Matters: Alexander Hamilton and The Industrial Nation

By Dean A. Dohrman, Ph.D., ALPF Board Member & Senior Fellow


This is the fifth in a series of short essays focusing on our constitutional history and its most significant shapers.  These leaders all had a significant impact.  This series will attempt to relate the unique features that defined their leadership with an eye toward elucidation of our constitutional system as well as a deeper understanding of our national history.

As George Washington became our first president in 1789, he turned to solid political leadership for this brand new adventure of the American republic.  To help with the administration of the newly formed government, Washington collected a modestly sized group of department heads, the cabinet, to help him conduct the daily business of governing.  The group consisted of Thomas Jefferson as his Secretary of State, Henry Knox, Secretary of War, and Edmund Jennings Randolph, the Attorney General (although not an official cabinet position until 1870).  To round out the cabinet of four, Alexander Hamilton became the first Secretary of Treasury, and proved to be one of the most influential department secretaries of all time.  Determined, organized, and visionary all describe Hamilton very well.

Born in the West Indies during 1755 or 1757, Hamilton faced early obstacles in his life.  At age 8, Hamilton’s father left his mother.  To further complicate his life, in a time when society had little forgiveness, his parents were not married; therefore, although an avid reader, he could not go to parochial school because of his parents’ marital status (or more accurately, the lack thereof).  He effectively became an orphan at 13 when his mother died.  Always resilient, he began work in a shipping company, which he subsequently ran by the age of 15.  Eventually, he solicited enough donations to allow travel north in a quest to further his studies.

Hamilton attended King’s College where, in 1775, he joined the New York militia and rose to the rank of lieutenant.  He joined Washington’s staff in 1776, and there he stayed for four years.  In February 1781, Hamilton resigned, but he gained a field command just a few months later in July.  He played a significant role in the cavalry during the American Yorktown victory.  Shortly after this watershed event, Hamilton resigned his commission.

In 1782, Hamilton became a New York representative to the Confederation Congress.  Already frustrated with the decentralized nature of the American war effort (he personally witnessed the lack of supplies and subsequent suffering at Valley Forge), Hamilton continually worked for an independent source of revenue for the national government.  In April 1783, Washington defused a rebellion among officers; however, in June 1783 disgruntled soldiers marched on Philadelphia, and Congress moved to Princeton, New Jersey.  Frustrated, Hamilton resigned Congress in July 1783.

In New York, he read law and joined the state bar.  He helped found the Bank of New York in 1784.  He also played a key role in reopening King’s College (damaged during fighting in 1776 and closed) which would be renamed Columbia College (now Columbia University, the oldest institution of higher learning in the state of New York).  However, with the U.S. in a financial crisis, Hamilton attended the Annapolis Convention in 1786 in an effort to help his country.  Although only five states attended, they agreed to the 1787 Constitutional Convention proposed by Hamilton.

At the Constitutional Convention, Hamilton offered the idea of an elected president and senate to serve for life based on good behavior.  The president would have absolute veto, and state governors would be by appointment from the federal government.  His proposals went nowhere, and although not satisfied with the final draft of the Constitution, he lent his endorsement because it offered a much needed improvement to the Articles of Confederation.  In fact, along with James Madison and John Jay he wrote, or helped write, about 50 of the 85 Federalist Papers supporting ratification of the Constitution.

As a member of the first presidential cabinet, Hamilton played a key policy development role for the Department of the Treasury. He sought to prepare America’s infant financial system for growth in the new age of industry.  Hamilton’s Report on Manufactures proposed: 1) protection of emerging American industries (high tariffs); 2) physical infrastructure to connect the country (such as canals); and 3) a reliable monetary system.

These features would persist as the American economy developed in the 19th Century.  As the French Revolution brought tension to international politics, he favored repairing relations with Britain, which would help develop Jay’s Treaty, officially titled the Treaty of Amity, Commerce, and Navigation, Between His Britannic Majesty and the United States of America.

Hamilton proposed a broad interpretation of the elastic clause to increase Congressional power over the economy (this would be implemented by the Supreme Court with the McCullough v. Maryland decision).  His First Report on Public Credit resulted in the dinner table compromise (with James Madison, brokered by Jefferson), allowing the federal government to assume state debts for the war and placing the new capitol on the Potomac River, now the District of Columbia.  His Second Report on Public Credit produced the First Bank of the United States (established in 1791).  Bonds issued by the bank (paper securities) would increase the money supply allowing for economic growth.

This would fuel Hamilton’s plan to expand American manufacturing.  He also established the U.S. Mint to coin American money, and the Revenue Cutter Service to stop smugglers avoiding taxes (precursor of the Coast Guard).  Hamilton firmly believed that the federal government needed to ensure a steady money supply, enhance certain businesses, and get the government’s financial house in order.  All of this, of course, meant taxes, specifically the whiskey excise tax of 1791, which became a substantial domestic test for the infant government.

The backlash against the tax became the armed resistance of the Whiskey Rebellion, much of the unrest in western Pennsylvania.  Tom the Tinker extended the struggle beyond the tax collectors and those who supported them (such as renting offices) to those paying the tax.  This tactic of intimidation gained momentum, so the president raised a militia force in response.  When the armed force led by Washington, Hamilton, and General Henry “Lighthorse Harry” Lee reached western Pennsylvania in 1794, the rebels were dispersed and difficult to arrest.  In the end, two were sentenced to death, but Washington commuted their sentences; two were jailed, one dying before being released; and several were fined.  Eventually, Congress repealed the tax in 1803 after the Jeffersonians took control, but federal authority had been established.

After his service with the U.S. Treasury, Hamilton returned to New York.  Never one to be idle, he became entangled in the 1800 presidential election, an election that went to the House of Representatives to be decided.  Although he had butted heads with Jefferson on several occasions, Hamilton considered his rival to be a much better choice than the alternative of Aaron Burr.  Hamilton let his choice be known publicly, and thwarted Burr’s efforts.  He again came out against Burr when Burr ran for the governorship of New York.  As a result, Burr challenged Hamilton to a dwell.  In the stand-off, Burr’s shot hit Hamilton in his abdominal area causing considerable damage.  Hamilton died the next day.

Always an interesting, and contentious, individual, Hamilton played a key role in shaping the young American nation.  Proposing institutions that would support building an economy of manufacturing over agriculture certainly had its impact.  Although the U.S. remains a dominant agricultural producer in the global economy today, it is hard to imagine where the world would be without the industrial might of our country during World War I and World War II.  There is little doubt that Hamilton set the U.S. on a specific course for future growth and deserves his placement upon the ten dollar bill.

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