History Discussion - Research Paper Example

Hamilton’s Fiscal Policies Introduction Alexander Hamilton was an intriguing individual, a self-made man who possessed a kind of ambition that fueled incredible success. He was born to a single mother in the West Indies who earned her living as a shopkeeper and she taught Hamilton his first economic principles. He later went on to a big mercantile firm as an apprentice. These modest beginnings paved way for Hamilton’s becoming the principal activist for a contemporary capitalist economy in the early national US (Ushistory.org, 3). This paper discusses Hamilton’s contributions and proposals to the congress on the fiscal and monetary policies.

It also looks at how Alexander Hamilton’s policies wanted to use the wealthy, manufacturers and the US National Bank to turn around the economy that was affected by a series of civil revolutions; as well as why his proposals were criticized. Finally, it discusses the impacts of his policies. Top of FormAlexander Hamilton was the first treasury secretary of the United States government headed by President Washington (Swanson, 43). When he was appointed the treasury secretary, the United States government was facing hard economic times following the American revolutions.

The government was faced with huge debts, inflation and the majority of economic sectors seemed to be doing badly. It is then that President Washington tasked Alexander Hamilton with the duty of stabilizing the United States economy. Alexander Hamilton was to come up with fiscal policies that would revive the economy of the federal government. He advocated for modern capitalism to turn around the United States economy (Hansen, 166). In his first steps, towards reviving the economy, Hamilton proposed the chartering of the first United States National Bank.

The bank’s mandate was assisting the government in coming up with monetary and financial solutions, serving as the main depository arm of the federal government as well as regulating state banks. He also recommended that the outstanding Confederation Debt be funded at face value. The paying of these outstanding state debts would ensure stability and commitment of the government in restoring its economy. To finance the paying off debts, Hamilton proposed an issue of new bonds to investors who would gain profits when the government was able to pat the new bonds (Swanson, 43).

In his approach to financial and monetary policies, Hamilton targeted the wealthy individuals within the US. He wanted to align the business class, manufacturers, creditors and all the wealth with the federal government. He wanted to earn the confidence of these influential people and create a mutual relationship that would enhance growth and stability for the new nation. He argued that putting the wealth in the driving seat of reviving the economy was vital and that they were well able to use public funds to grow the economy of the United States of America than the common people were (Gruver, 993).

Hamilton also proposed that the government use a closed economy system. This aimed at making the United States of America manufacturers who had for long periods relied on agricultural exports. He felt that the continued use and over reliance on agricultural exports along with the importation of expensive manufactured goods from other countries, mainly Britain, was largely to blame for the low economy in the United States (Swanson, 54). He proposed a mercantilist economic system that would allow the government to protect their manufacturers by giving direct subsidies and reduced taxes on manufactured goods as well as putting tariffs on imports (Hansen, 166).

Hamilton’s proposals were met with fierce criticisms from some senior members of the government. In 1970 after he presented the proposal for funding the outstanding State debts and James Madison rose to challenge him in the congress urging that States with lower debts would be disadvantaged by being forced to pay debts for states with higher debts (Robert & Ambrose, 91). Madison and Jefferson also opposed Hamilton’s proposal of opening a bank, with Madison arguing that the formation of the bank was not constitutional and was against the centralization on the government operations.

Jefferson on the other hand argued that the starting of a bank was not a prerogative of the congress and hence unconstitutional (Gruver, 993). ConclusionApparently, despite the many criticisms that Hamilton faces, his fiscal and monitory policies of starting a Central Bank, his support for manufacturing industry and his public credit handling mechanisms have become the pillar of many economies other than that of the United States. His policies have lived long after his death – most economies have a central Bank (National Bank), which acts as the depository arm of the government.

His proposal on the government supporting manufacturers has also been the backbone for America’s economy ever since. Moreover, his policy on using the wealthy to drive the economy proved very instrumental in having the United States of America clear her debts.Works CitedGruver, Rebecca. An American History. New York: Knopf. 1985. Print.Hansen, Alvin. Fiscal Policy and Business Cycles. London: Routledge, 2003. Print.Robert,martin and Ambrose,douglas The Many Faces of Alexander Hamilton : The Life and Legacy of Americas Most Elusive Founding Father.

New York: New York University Press, 2006. Print. Swanson , Donald. The Origins of Hamiltons Fiscal Policies. University of Florida Press. 1963. Print.Ushistory.org. Hamiltons Financial Plan. 2008. Web.