First U.S. secretary of the treasury (1789–1795)
on the south patio of the
Treasury Building in
Washington, D.C. In 1789, Washington—who had become the
first president of the United States—appointed Hamilton to be his cabinet's secretary of the treasury on the advice of
Robert Morris, Washington's initial pick. On September 11, 1789, Hamilton was nominated and confirmed in the Senate and sworn in the same day as the first
United States secretary of the treasury.
Report on Public Credit Before the adjournment of the House in September 1789, they requested Hamilton to make a report on suggestions to improve the public credit by January 1790. Hamilton had written to Morris as early as 1781, that fixing the public credit will win their objective of independence. While writing the report he also sought out suggestions from contemporaries such as
John Witherspoon and Madison. Although they agreed on additional taxes such as distilleries and duties on imported liquors and land taxes, Madison feared that the securities from the government debt would fall into foreign hands. Hamilton felt the money from the bonds should not go to the soldiers who had shown little faith in the country's future, but the speculators that had bought the bonds from the soldiers. The process of attempting to track down the original bondholders along with the government showing discrimination among the classes of holders if the war veterans were to be compensated also weighed in as factors for Hamilton. As for the state debts, Hamilton suggested consolidating them with the national debt and label it as federal debt, for the sake of efficiency on a national scale. When the report was submitted to the House of Representatives, detractors soon began to speak against it. Some of the negative views expressed in the House were that the notion of programs that resembled British practice were wicked, and that the balance of power would be shifted away from the representatives to the executive branch.
William Maclay suspected that several congressmen were involved in government securities, seeing Congress in an unholy league with New York speculators. Another issue in which Hamilton played a role was the temporary location of the capital from New York City.
Tench Coxe was sent to speak to Maclay to bargain about the capital being temporarily located to Philadelphia, as a single vote in the Senate was needed and five in the House for the bill to pass. extensive studies on the
Bank of England, the blunders of the
Bank of North America and his experience in establishing the Bank of New York. Hamilton suggested that Congress should charter
the national bank with a capitalization of $10 million, one-fifth of which would be handled by the government. Since the government did not have the money, it would borrow the money from the bank itself, and repay the loan in ten even annual installments. The bank was to be governed by a twenty-five-member board of directors that was to represent a large majority of the private shareholders, which Hamilton considered essential for his being under a private direction. and those of the agrarian lifestyle would not benefit from it. Madison warned the Pennsylvania congress members that he would attack the bill as unconstitutional in the House, and followed up on his threat. Madison argued his case of where the power of a bank could be established within the Constitution, but he failed to sway members of the House, and his authority on the constitution was questioned by a few members. While Hamilton's vision laid the groundwork for a structured financial system, the concept of
centralized banking has remained one of the most polarizing economic debates in American history, garnering both staunch
criticism and fervent support from economists and the public alike.
Establishing the mint In 1791, Hamilton submitted the
Report on the Establishment of a Mint to the House of Representatives. Many of Hamilton's ideas for this report were from European economists, resolutions from the 1785 and 1786 Continental Congress meetings, and people such as Robert Morris, Gouverneur Morris and Thomas Jefferson. Because the most circulated coins in the United States at the time were
Spanish currency, Hamilton proposed that minting a
United States dollar weighing almost as much as the Spanish peso would be the simplest way to introduce a national currency. Hamilton differed from European monetary policymakers in his desire to overprice gold relative to silver, on the grounds that the United States would always receive an influx of silver from the West Indies. he ultimately issued a bimetallic currency at a fixed 15:1 ratio of silver to gold. Hamilton proposed that the U.S. dollar should have fractional coins using decimals, rather than eighths like the Spanish coinage. This innovation was originally suggested by
Superintendent of Finance Robert Morris, with whom Hamilton corresponded after examining one of Morris's
Nova Constellatio coins in 1783. He also desired the minting of small value coins, such as silver ten-cent and copper cent and half-cent pieces, for reducing the cost of living for the poor. One of his main objectives was for the general public to become accustomed to handling money on a frequent basis. In response, Hamilton proposed to Congress to enact a naval police force called
revenue cutters in order to patrol the waters and assist the custom collectors with confiscating contraband. This idea was also proposed to assist in tariff controlling, boosting the American economy, and promote the merchant marine. Concerning some of the details of the System of Cutters, Hamilton wanted the first ten
cutters in different areas in the United States, from New England to Georgia. Each of those cutters was to be armed with ten muskets and bayonets, twenty pistols, two chisels, one broad-ax and two lanterns. The fabric of the sails was to be domestically manufactured; In response of diversifying revenues, as three-fourths of revenue gathered was from commerce with Great Britain, Hamilton attempted once again during his
Report on Public Credit when presenting it in 1790 to implement an excise tax on both imported and domestic spirits. The taxation rate was graduated in proportion to the whiskey proof, and Hamilton intended to equalize the tax burden on imported spirits with imported and domestic liquor. Although the inspectors were not allowed to search houses and warehouses, they were to visit twice a day and file weekly reports in extensive detail. Strong opposition to the whiskey tax by
cottage producers in remote, rural regions erupted into the
Whiskey Rebellion in 1794; in
Western Pennsylvania and western
Virginia, whiskey was the basic export product and was fundamental to the local economy. In response to the rebellion, believing compliance with the laws was vital to the establishment of federal authority, Hamilton accompanied to the rebellion's site President Washington, General
Henry "Light Horse Harry" Lee, and more federal troops than Washington had usually commanded during the Revolution. This overwhelming display of force intimidated the leaders of the insurrection, ending the rebellion virtually without bloodshed.
Manufacturing and industry , which Hamilton envisioned using to power new factories Hamilton's next report was his
Report on Manufactures. Although he was requested by Congress on January 15, 1790, for a report for manufacturing that would expand the United States' independence, the report was not submitted until December 5, 1791. In response to the agrarian detractors, Hamilton stated that the agriculturists' interest would be advanced by manufactures, and that agriculture was just as productive as manufacturing. Among the ways that the government should assist manufacturing, Hamilton argued for government assistance to "
infant industries" so they can achieve
economies of scale, by levying protective duties on imported foreign goods that were also manufactured in the United States, for withdrawing duties levied on raw materials needed for domestic manufacturing, Congress shelved the report without much debate, except for Madison's objection to Hamilton's formulation of the
general welfare clause, which Hamilton construed liberally as a legal basis for his extensive programs. In 1791, Hamilton, along with Coxe and several entrepreneurs from New York City and Philadelphia formed the
Society for the Establishment of Useful Manufactures, a private industrial corporation. In May 1792, the directors decided to examine the
Great Falls of the
Passaic River in
New Jersey as a possible location for a manufacturing center. On July 4, 1792, the society directors met
Philip Schuyler at
Abraham Godwin's hotel on the Passaic River, where they led a tour prospecting the area for the national manufactory. It was originally suggested that they dig mile-long trenches and build the factories away from the falls, but Hamilton argued that it would be too costly and laborious. The location at Great Falls of the Passaic River in New Jersey was selected due to access to raw materials, it being densely inhabited, and having access to water power from the falls of the Passaic. The profits were to derive from specific corporates rather than the benefits to be conferred to the nation and the citizens, which was unlike the report. Hamilton also suggested the first stock to be offered at $500,000 and to eventually increase to $1 million, and welcomed state and federal government subscriptions alike. In spite of Hamilton's efforts to mend the disaster, the company folded. However, in 1794, policy toward Britain became a major point of contention between the two parties. Hamilton and the Federalists wished for more trade with Britain, the largest trading partner of the newly formed United States. The Republicans saw monarchist Britain as the main threat to republicanism and proposed instead to start a trade war. The Jay Treaty passed the Senate in 1795 by exactly the required two-thirds majority. The treaty resolved issues remaining from the Revolution, averted war, and made possible ten years of peaceful trade between the United States and Britain. Several European states had formed the
Second League of Armed Neutrality against incursions on their neutral rights; the cabinet was also consulted on whether the United States should join the alliance and decided not to. It kept that decision secret, but Hamilton revealed it in private to George Hammond, the British minister to the United States, without telling Jay or anyone else. His act remained unknown until Hammond's dispatches were read in the 1920s. This revelation may have had limited effect on the negotiations; Jay did threaten to join the League at one point, but the British had other reasons not to view the alliance as a serious threat.
Resignation from public office Hamilton's wife suffered a miscarriage while he was absent during his armed repression of the Whiskey Rebellion. In the wake of this, Hamilton tendered his resignation from office on December 1, 1794, giving Washington two months' notice, Before leaving his post on January 31, 1795, Hamilton submitted the
Report on a Plan for the Further Support of Public Credit to Congress to curb the debt problem. Hamilton grew dissatisfied with what he viewed as a lack of a comprehensive plan to fix the public debt. He wished to have new taxes passed with older ones made permanent and stated that any surplus from the excise tax on liquor would be pledged to lower public debt. His proposals were included in a bill by Congress within slightly over a month after his departure as treasury secretary. Some months later, Hamilton resumed his law practice in New York to remain closer to his family. After Jay resigned as Chief Justice in June 1795 to become
Governor of New York, Attorney General
William Bradford implored Hamilton to take the position, but Hamilton declined to focus on New York state politics.
Emergence of political parties Hamilton's vision was challenged by Virginia agrarians
Thomas Jefferson and James Madison, who formed the
Democratic-Republican Party. They favored strong state governments based in rural America and protected by state militias as opposed to a strong national government supported by a national army and navy. They denounced Hamilton as insufficiently devoted to republicanism, too friendly toward corrupt Britain and the monarchy in general, and too oriented toward cities, industry and banking. The two-party system
began to emerge as political parties coalesced around competing interests. A congressional caucus, led by Madison, Jefferson, and
William Branch Giles, began as an opposition group to Hamilton's financial programs. Hamilton and his allies began to call themselves
the Federalists. Hamilton assembled a nationwide coalition to garner support for the administration, including the expansive financial programs Hamilton had made administration policy and especially the president's policy of neutrality in the European war between Britain and France. Hamilton publicly denounced French minister Genêt, who commissioned American
privateers and recruited Americans for private militias to attack British ships and colonial possessions of British allies. Eventually, even Jefferson joined Hamilton in seeking Genêt's recall. If Hamilton's administrative republic was to succeed, Americans had to see themselves first as citizens of a nation and experience an administration that proved firm and demonstrated the concepts found within the Constitution. The Federalists did impose some internal direct taxes, but they departed from most implications of Hamilton's administrative republic as risky. The Republicans opposed banks and cities and favored the series of unstable revolutionary governments in France. They built their own national coalition to oppose the Federalists. Both sides gained the support of local political factions, and each side developed its own partisan newspapers.
Noah Webster,
John Fenno, and
William Cobbett were energetic editors for the Federalists, while
Benjamin Franklin Bache and
Philip Freneau were fiery Republican editors. All of their newspapers were characterized by intense personal attacks, major exaggerations, and invented claims. In 1801, Hamilton established a daily newspaper, the
New York Evening Post, and brought in
William Coleman as its editor. Hamilton's and Jefferson's incompatibility was heightened by the unavowed wish of each to be Washington's principal and most trusted advisor. An additional partisan irritant to Hamilton was the
1791 United States Senate election in New York, which resulted in the election of Democratic-Republican candidate
Aaron Burr over Federalist candidate Philip Schuyler, the incumbent and Hamilton's father-in-law. Hamilton blamed Burr personally for this outcome, and negative characterizations of Burr began to appear in his correspondence thereafter. The two men did work together from time to time thereafter on various projects, including Hamilton's army of 1798 and the
Manhattan Water Company. ==1796 presidential election==