The United States economic system is based on the ideas of truly one man, Alexander Hamilton. One of the few founding fathers to be emblazoned on our currency that was not President, he shaped our nation in deep ways that are still present to this very day. He not only shaped the economic system of the United States but transformed the government into a working cohesive system. His upbringing defined him throughout his entire life, altering his decisions in ways he himself was probably not aware. In order to understand the economy and the government you need to understand the man who helped create it. For it was his mind that brought this form of capitalism and strong central government with protections afforded to the people, that we embody here in the United States. While we have tweaked it over time to meet our needs and change with the tides of history, the economic system and the government the people embody still rests on the foundation that Hamilton laid. To understand his vision, the way he saw the way the world works, you need to understand what made Hamilton work, the levers and pulleys that drove him to see the world in the way he did.
The capitalist system that Hamilton put in place for our country was based on his experiences as a boy in the Caribbean. He was born to a mother who had recently got out of prison for "whoring". His father left at an early age and it was left to his mother, Rachel, to support the family. When Alexander was only 13 years old, his mother died from an illness and severe fever. Left penniless and an orphan he was left all on his own, in an island of the Caribbean. The odds of him rising to the stature and prominence that he was able to achieve are astounding.
He began as a clerk at a prominent trading company on the island, Beekman and Kruger. He saw all types of different people with different backgrounds, different races, all interacting, trading; it was an economy in its own right. Hamilton was left in charge of the company for 5 months while his boss was out to sea giving him more experience with commerce, trade, and people. He saw slaves being sold, and traded a few himself under the employment of Beekman and Kruger. This developed his sentiments against slavery as an institution. He studied fervently but had no true formal education. He found an affinity for writing and in 1772 wrote a piece on a recent hurricane that has passed through the island chain. This was his ticket off the island. This article was to impress the local leaders so much they created a fund to formally educate Hamilton in the colonies properly.
His experiences as a boy cannot be understated on how much they shaped his life, and ways of thinking. The commerce he saw and the inner workings of that system was the foundation for our economy. He believed that all walks of life can prosper if they are able to use their own skills to the best of their ability. It did not matter what the color of your skin was, it did not matter who your parents were, it did not matter where you came from; it was a meritocracy. For he himself had been born into a family that had barely anything, was stripped of everything through disease and death, and had worked himself into one of the most prestigious universities, Princeton, though he attended Kings College, known today as Columbia University. He was the American dream. With the right opportunities he believed anybody could achieve success as he had.
The economy we see today is based on these same principles, liberty, trade, the protestant ethic, all of them essential to a free and fair market place. This view of an American economy was contrasted by the Democratic Republican Party's economic vision, an agrarian American. America would be largely land owner based with large plantations. This type of economy, this lifestyle, this system, was dependent upon large amounts of cheap labor, much like a factory for manufacturing, which meant, slavery. While modern day manufacturing jobs are by no means slavery, we need not look too far in our own history as well as across the globe to see sweat shops and extremely harsh labor conditions in which often people die. This view of America would prolong slavery and keep a tiered system of classes in place. This cut right to the core of Hamilton due to his own life story and how he arrived here in America. Hamilton fought tooth and nail to put in place a system that allowed anybody who worked hard a chance at making a better life for themselves, the American Dream. It took moving the Capitol from New York City to where it currently resides by the Potomac river, but he eventually cut a deal to ensure the American Dream would become a reality.
Hamilton was a noted proponent of a strong centralized national government. When debating in the Constitutional convention he stated that the President should serve for his entire life. This rang in the ears of his fellow colonists as he was calling for a King to be enacted, the one that they just fought, something that would not be forgotten. Why Hamilton was such a proponent of strong central government and large authoritative bodies, I believe, can be traced back to his lack of a father. When his father left him he went bouncing around from one father figure type to the next. His teacher at an early age, his employer at Beekman and Kruger, and then in the army he found in a father figure, George Washington. This seeking out of strong authority in his personal life is emulated in his political life. He felt compelled in his personal life to seek out an authoritative figure time after time. This was due to the void his father left, when he physically left. This void and need for authority became projected in his politics with his strong beliefs in a central government, a central authority, a father figure. One could speculate that if Alexander Hamilton's father would have stayed and not left him as a young boy that his politics would have been much more in line with that of Jefferson or Madison in regards to his views on federal v state power. This key personal element, his father abandoning him as an early child, shaped his views in ways that impacted our nation in ways Hamilton himself could have never imagined. After all, it was Hamilton who wrote a majority of the Federalist papers which if never penned it is doubtful that the Constitution would have ever been ratified.
The economic vision that Hamilton espoused was, as previously mentioned, strongly opposed by many. One of the reasons that it was opposed so strongly was due to the debt that each colony had accrued from the Revolutionary war. Simply put everybody was broke... sound familiar? At this point in time the states were viewed as independent nations, all issuing their own currency which due to the war was now basically worthless because of inflation. Each state carried different amounts of debt. Many of the southern states, such as Virginia, had very little debt left due to their cheap work force, slavery, and minimal costs. Meanwhile the northern states were struggling due to their not so cheap labor and trade based economics. This created a large problem. What Hamilton proposed was creating a central bank to take in all of the state's debts. This would free up the state's credit allowing them to have a clean start. The government would then sell that debt to investors or speculators as a guarantee that the US government would pay them that money back. In other words, he bailed out the states, and took on the debt, creating a unified system. This is the very system that allows our economy to be so prosperous over time.
In 1792 the nation was faced with its first fiscal crisis. Speculators had driven up the stock prices of the Bank of New York, mainly a congressman and merchant. The bubble was artificially inflated and when it reached its limit it popped causing a bank run. The culprits, Duer and Macomb, were ruined financially and literally. They were thrown in debtor’s prison for the rest of their lives. Hamilton acted swiftly bailing out the banks with US Securities. The goal was to allow lending to continue, to keep credit flowing. Within a few days the bank runs were over and the financial situation slowly began to settle allowing growth to continue. This action by Hamilton is believed to be the factor in saving our economy from its first real fiscal crisis. In fact it set the precedent in a long line of bailouts as recent as the ones we saw in 2008. So the next time you hear socialism when bail-outs are being talked about, remember that you are calling Alexander Hamilton, the founder of the American Dream, socialist. What Hamilton attributed the financial panic to was an ill that one must deal with if you wish to have a free system, greed and speculation. It is inherent in the market and therefore must be regulated against. Otherwise you will have panics and other economic instabilities which cause great loss of wealth and can do great damage to our nation.
Hamilton was by no means a perfect man. Despite all of his achievements he is better known for his failures. Being raised by a single mother gave him the propensity to be a push over for women in despair. This later in his life would lead to an affair that would run his name through the paper and back. He was the laughing stock of the nation for a while. He defended himself by putting every shred of dirty laundry, every detail out in print. He published every letter and exposed himself in great detail. What he proved was that while a sinful man, he was an honest man with integrity. He believed that if he explained a situation all the way to the tiniest detail that you would see his point of view, and often times that is exactly what happened. He was known for his wild temper, one in which it took George Washington to muzzle. He cost John Adams the election in 1800 by attacking him verbally and not endorsing him, though they were of the same party. His demise was also a folly of his lack of a filter over his mouth. In 1800 he threw his weight behind Thomas Jefferson over Aaron Burr in the Presidential election. This snubbed Burr and created a feud that would cost Hamilton his life. Over time the two began mudslinging and with each response came a viler volley in return. Finally, something Hamilton said pushed Burr over the line and believed that Alexander was questioning his honor. A duel was demanded. In a letter he wrote to his wife before leaving for his date with death he stated that he could not kill a man being a good Christian. He had also given his son the exact same advice when he was in a duel years back. He told his son to shoot to the side and purposefully miss. This was done in duels at the time but was a rather risky move. His 19 year old son was killed in defense of his father by dueling. Hamilton could not bring himself to do the action that he advised his son not to do in his name. The duel was the end of Hamilton, and a great man.
Hamilton was a cornerstone that this country was built upon. Without him it is doubtful our nation would be the empire it is today. The economic power house that we have become is due in direct thanks to him and his struggle for his economic vision. It is his life story that embodies the American dream. He left a piece of him in the institutions he helped create that have made this nation so great. We can look back upon his writings and actions for advice on what to do, and what not to do. He had high moments such as creating the financial system and low moments such as signing and advancing the alien and sedition act. His views seem somewhat contradictory at points, just like American politics. We want to move towards cleaner energy but we give billions to oil companies in subsidies; we promote liberty and justice for all, yet we operate Guantanamo Bay Prison. We must learn from both the good and the ill of the man in order to ensure a more prosperous nation. Hamilton gives us both the good and the bad in clear stark contrast. However his genius still is teaching us today in the realm of politics and finance. While he has long since passed on, his impact on this nation continues centuries after.