1 - Public Credit
- First Report on the Public Credit.
- Read the report here.
The report analyzed the financial standing of the United States and made recommendations to reorganize the national debt and to establish the public credit. Commissioned by the US House of Representatives on September 21, 1789, the report was presented on January 9, 1790, at the second session of the 1st US Congress. The 40,000-word document called for full federal payment at face value to holders of government securities ("redemption") and the federal government to assume funding of all state debt ("assumption")
- Click here for debt assumption.
- Understanding the National Debt.
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2 - Establishing national bank
- The Report on a National Bank.
Submitted on December 14, 1790, the report called for the establishment of a central bank with the primary purpose to expand the flow of legal tender, monetizing the national debt by issuing of federal bank notes.
The ease with which Federalists advanced legislation to incorporate the bank impelled agrarian opposition that was hostile to Hamilton's emerging economic nationalism. Resorting to constitutional arguments., US Representative James Madison challenged Congress's broad authority to grant charters of incorporation under the "necessary and proper" clause of the US Constitution and charged Hamilton with violating a literal, strict constructionist interpretation of the founding document.
Despite Madison’s objections, the Bank Bill of 1791 penned to form the First Bank of the United States passed without amendment in the US House of Representatives by a vote of 39-20 on February 8, 1791. The bank was endowedwith a 20-year charter.
- Bank Charters.
- Bank Bill of 1791.
- Nicholas Biddle.
- First Bank of the United States.
- Second Bank of the United States.
- McCullough v Maryland.
- Jackson's Veto of a Third National Bank.
- The Bank War.
- Federal Reserve System.
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3 - Manufactures
- Report on Manufactures.
Hamilton reasoned that to secure American independence, the United States needed to have a sound policy of encouraging the growth of manufacturing and ensure its future as a permanent feature of the economic system of the nation. He argued these could be achieved by bounties or subsidies to industry, regulation of trade with moderate tariffs (which were intended not to discourage imports but to raise revenue to support American manufacturing by subsidies), and other government encouragement. These policies would not only promote the growth of manufacturing but also provide diversified employment opportunities and promote immigration to the young United States. They would also expand the applications of technology and science for all quarters of the economy, including agriculture. In his report, Hamilton advocated rewarding those bringing "improvements and secrets of extraordinary value” " to the United States. That contributed to making the United States a haven for industrial spies.
. . . Hamilton reasoned that bounties (subsidies) to industry, which would rely on funds raised by moderate tariffs, would be the best means of growing manufacturing without decreasing the supply or increasing the prices of goods. Such encouragement by direct support would make American enterprise competitive and independent along with the nation as a whole. In part subsidies would be used for the following:
- Encourage the nation's spirit of enterprise, innovation, and invention.
- Support internal improvements, including roads and canals to increase and to encourage domestic commerce.
- Grow the infant nation to a manufacturing power that would be independent of control by foreign powers by relying on their goods for domestic, especially defense supplies.
- Manufacturing in the Colonial and Antebellum Eras.
- Manufacturing in America.
- The First American Factories.
- Protective Tariff.
- Subsidies.
- Tax Breaks.
- Tax Deductions.
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