Table of Contents
Alexander Hamilton is the father of modern banking.
Alexander Hamilton, born in Charles Town, Nevis, on January 11, 1755, was an American statesman, an influential interpreter who also promoted the USA’s Constitution, and one of the founding fathers who organized the nation’s financial systems. He led the Federal government’s state debt funding and helped establish the national bank, which supported manufacturing and a strong army.
He had a vision that led to the establishment of the tariff system and a friendly trade relationship with Britain. He founded the Federalist Party, the New York Post, and the USA Coast Guard. He was the Secretary of the Treasury when George Washington was the President. Thomas Jefferson opposed him and argued for a smaller government and agrarianism. He organized a Strong Central Government led by a vigorous executive branch.
Alexander Hamilton, Father of American Banking
Why did Alexander Hamilton want to create a National bank?
Hamilton and the Federalists wanted a national bank because they believed a strong federal government would benefit all the states financially, even as it regulated their freedom to print money.
Alexander Hamilton’s proposal to create a National Bank in the United States was part of his broader financial plan as the first Secretary of the Treasury. He aimed to stabilize and improve the nation’s economy while establishing a strong central government. Here are the key reasons Hamilton pushed for the creation of a National Bank, explained in detail:
1. Establish Financial Order
- Background: Post-Revolution, the United States was mired in debt domestically and internationally. The country lacked a centralized financial system, which hampered economic growth and governance.
- Objective: Hamilton saw the establishment of a National Bank as a means to bring order to the chaos. The government could more effectively manage its debts and streamline fiscal policies by centralizing financial operations.
2. Create a Unified Currency
- Issue: Different states and entities were issuing their currencies, leading to confusion and inefficiency in trade.
- Solution: A National Bank would facilitate the issuance of a unified currency, making transactions smoother and more predictable across states, thus enhancing domestic and international trade.
3. Foster Economic Development
- Vision: Hamilton believed in a robust and industry-based economy, contrary to the agricultural model that some of his contemporaries favored.
- Mechanism: By providing a stable currency and a source of credit, the National Bank would encourage investment in industries and infrastructure, propelling economic growth and diversification.
4. Establish Government Creditworthiness
- Challenge: The new nation struggled with credibility issues on the international stage, especially in financial matters.
- Strategy: A central bank would demonstrate financial discipline and capacity for managing debts, thus improving the United States’ credit rating. It would enable the government to borrow money on better terms if needed.
5. Strengthen the Federal Government
- Political Aspect: Hamilton’s Federalist leanings influenced his economic policies. He sought to enhance the powers of the federal government vis-à-vis the states.
- Method: The bank was a tool to centralize power by consolidating control over the nation’s finances under the federal government, thus strengthening the national government’s authority and capacity to govern.
6. Facilitate Government Transactions
- Practicality: Handling taxes, duties, and other government revenues was cumbersome and inefficient under the existing state-based system.
- Efficiency: The National Bank would act as the government’s fiscal agent, streamlining the collection and disbursement of government funds and simplifying financial management.
When did Alexander Hamilton create the National Bank?
In December 1790, Hamilton submitted a report to Congress outlining his proposal for creating a National bank. As a result, the National Bank of the United States was established in 1791 to serve as a repository for federal funds and as its fiscal agent.
Is Alexander Hamilton a Founding Father?
Alexander Hamilton made his reputation during the Revolutionary War and became one of America’s most influential Founding Fathers. He was a dynamic champion of a strong federal government and played a crucial role in defending and ratifying the U.S. Constitution.
Alexander Hamilton was not a U.S. president, but he became a founding father of the USA even though he was born out of wedlock. A wealthy businessman took him in after he became an orphan as a child. As a teen, he pursued his education, and in 1777, he was in the American army when the American Revolutionary War was fought. After the war, he became a senior aide to George Washington and led the new Continental Army. In addition, he represented New York in the Congress of the Confederation.
Hamilton was a trusted member of President Washington’s first Cabinet as he led the Treasury Department; he helped implement the Whiskey Tax, which was very controversial after the tariff on imports could not fund the National government-backed Bank of America and assume state debt. The bankers and business people became members of the Federalist Party after mobilizing them and other network friends.
The Jay Treaty, which he spearheaded in 1794, is seen as part of the history of the two-party system that is still alive and well in the U.S. The party that he was a part of dominated politics for many years until Jefferson’s Democratic-Republican Party won the election in 1800.
Hamilton was instrumental in ending the international slave trade; he actively sought to change laws and campaigned against Vice President Burr in 1804. He tried to get elected to be the governor of New York State. Burr was very offended, and a duel between the two men left Hamilton badly hurt, and he died the following day.
He began developing an interest in life in places away from the tiny island where he lived after reading many books, and he liked writing. He wrote to his father about a hurricane that severely damaged the island he lived on, which was seen by a very influential journalist, who sent him to further his education in North America. He wrote about God’s wrath pouring out on the island because of the people’s love for vanity. The journalist thought his letter was a Sermon. It was awe-inspiring, and people were amazed that a young man who had not attended university yet could have written such a letter.
Beekman and Cruger was an import-export firm, where Hamilton was employed as a clerk in his early years. They traded with New York and New England. He proved to be very capable as a trader, and he was left to manage the firm in 1771 when his boss took a sea trip.
He spent time with Hercules Mulligan, who had a brother who did trading in 1772 after arriving in Boston on a ship before he went to New York. Mulligan assisted him in selling cargo, and he earned enough money to pay for his college tuition. Not long after, they met William Livingston, a revolutionary and leading intellectual. Livingston influenced him as he stayed with him at his Liberty Hall.
Hamilton was instrumental in ending the international slave trade; he actively sought to change laws and campaigned against Vice President Burr in 1804. He tried to get elected to be the governor of New York State. Burr was very offended, and a duel between the two men left Hamilton badly hurt, and he died the following day.
On July 12, 1804, after he resigned and practiced law in 1795, he founded the Bank Of New York.
What did the Federalists believe about banking?
Federalists believed a strong central bank was significant for the new U.S. nation. Federalists, like Alexander Hamilton, believed that a well-organized central bank could prevent banking abuses. Anti-federalists, like Patrick Henry, thought the central bank would have too much power.
Who killed Alexander Hamilton?
Vice President Aaron Burr shot and fatally wounded former Treasury Secretary Alexander Hamilton on July 11, 1804. Thus, the rivalry between Founding Fathers Aaron Burr and Alexander Hamilton ended in the most famous duel in American history.
Conclusion
Both practical and ideological motives drove Hamilton’s advocacy for a National Bank. He sought to resolve immediate financial chaos and lay the foundation for a prosperous, industrially diverse America with a strong central government. Despite opposition from those who feared centralization of power and those who preferred an agricultural economic model, establishing the Bank of the United States in 1791 marked a significant step in developing the nation’s financial system.
He is an expert in financial niche, long-term trading, and weekly technical levels.
The primary field of Igor's research is the application of machine learning in algorithmic trading.
Education: Computer Engineering and Ph.D. in machine learning.
Igor regularly publishes trading-related videos on the Fxigor Youtube channel.
To contact Igor write on:
igor@forex.in.rs
