The ultimate purpose of Alexander Hamilton’s financial plan was to gain independence from England for the United States and establish an efficient economic system in the country. The first secretary of the treasury, Hamilton, was asked to develop public creditworthiness internally, and externally with foreign partners. Moreover, his objectives included reinforcement of the US government at the expense of other member states.
Explanation:
The financial program was presented in four reports to Congress: in two reports on the Public Credit, in the Report on a National Bank, and the Report on Manufactures in 1790-1791. The three steps of Hamilton’s plan included the following: the establishment of the Central Bank, the assumption of debt of states by issuing interest-bearing bonds, and the regulation of trade and tariffs. The first secretary aimed to protect American business from the UK and other foreign competitors by establishing high taxes, government subsidies, and government-funded transport improvements.
Many forms of government support that Hamilton proposed to encourage industrial growth and the development of trade, including tariffs, subsidies, insurance premiums, were aimed at changing established traditions and overcoming the indecision of American businessmen. Hamilton sought not so much to support the active capitalists as to increase their number and inspire them by giving confidence. The first secretary created not only the class of industrial businessmen necessary for the development of capitalism but also the capital with which they would work.
Hamilton wanted to create the National Bank of the United States. He suggested that the Bank would be modeled based on the Bank of England. The Bank should collect taxes, give loans, and hold public funds. Thomas Jefferson opposed this initiative, arguing that the Bank would be unconstitutional or would promote corruption. However, Hamilton achieved his goal in 1791, when Congress passed a bill that created a National Bank for the next 20 years. President of the US George Washington signed the bill because he believed the Bank would be a crucial factor that would contribute to the country’s financial well-being.
The significant amount of debt that the United States had was the biggest problem at the time. Hamilton suggested that the US Government takes on all the states’ obligations, standardizing the debt, and makes its repayment much smoother by issuing interest-bearing bonds. The assumption of a liability offered by Hamilton had been heavily criticized. For example, states that had already paid their debts, such as Maryland and Virginia, did not like the idea of taxing to help reduce the debts of other states as it was not favorable for them. In the end, Hamilton decided to have a compromise. In exchange for the support of Southern states, he agreed to move the national capital.
Hamilton’s financial plan significance for the development of the modern US economy cannot be undervalued. The financial program and the main three steps were successfully implemented. This policy demonstrated America’s willingness to pay off its debts and attract the attention of foreign investors. Hamilton’s plan to accept the states’ obligations was financially beneficial to the young nation. He contributed to the creation of a stable country that gained the respect of its citizens and external partners. The new program, despite having some controversial results, brought the formation of a financial system that is adequate to the realities of a united nation, and to strengthen the position of the Federal Government.