This article was published in the New Haven Register on September 16, 2017.
The Broadway play “Hamilton: An American Musical” is a major hit, with a second national tour planned for 2018 and a film adaptation in the works. The sold-out show retells the story of Alexander Hamilton, the nation’s first secretary of the Department of the Treasury, from a modern perspective complete with rap music and a diverse cast.
While the show emphasizes Hamilton’s success as an immigrant from the West Indies, it also addresses the vital role he played in establishing America’s economic system. After serving as an aide to General George Washington during the American Revolution and as a delegate to the Constitutional Convention, Hamilton became the nation’s first Treasury secretary in 1789.
After arriving in America in 1773 as a precocious 16-year-old to enroll in what is now Columbia University in New York, Hamilton became active in the Revolution. During its first decade, the new country was plagued by trade and economic problems between the states and difficulties raising revenue to pay off war debts. Hamilton and other Federalists pushed for a stronger central government, which resulted in the U.S. Constitution and the creation of a chief executive, courts and taxing powers.
In his six years as Treasury secretary, Hamilton left a strong mark on the nation’s economic future, in spite of opposition by Thomas Jefferson and other proponents of state’s rights and individual rights.
In fact, Hamilton’s quest to establish a strong federal government famously resulted in the location of the nation’s capital on the Virginia-Maryland border. Hamilton wanted his newly formed Treasury department to take over state debts, as a first step toward building a fiscally strong nation, and Southern legislators were blocking the plan. At the same time, Northern legislators favored New York as the nation’s capital and blocked a plan by Southerners to place the capital on the Potomac River. The Compromise of 1790 gave each side what it wanted.
The resulting Funding Act of 1790 allowed the United States federal government to establish credit on the international stage. The Treasury department took over the Revolutionary War debts of states that had not yet paid those debts, and issued bonds to wealthy American citizens to pay them off. A tariff on imports raised money to pay the bondholders. The plan meant that foreign governments would accept U.S. credit, in light of federal taxing power, and both the Louisiana Purchase in 1803 and the War of 1812 were financed by money borrowed from Europe. It also gave the wealthy bondholders a stronger stake in the success of the nation. Hamilton also established a national bank, and his efforts boosted the growth of the nascent U.S. stock market.
Despite his accomplishments, Hamilton suffered an unfortunate fate in 1804. A long-standing feud with Vice President Aaron Burr ended with a duel in which Hamilton was killed, a dramatic story that tends to move the focus away from his central role in providing a strong foundation for the U.S. economy.