George Washington and Hamilton's Economic Policies

George Washington was considered ahead of his time and the first president of the United States. His presidency, along with John Adams', marked the Federalist Era (1789-1801). Alexander Hamilton, Washington's Secretary of the Treasury, was instrumental in shaping early American economic policy. He was considered a political genius, recognized for his ability to articulate the needs of the new nation and navigate the complexities of its nascent government.

Alexander Hamilton's Economic Vision

Hamilton's core idea was to establish a system where the national government could borrow money. This would incentivize the wealthiest citizens (the elites) to support the government, as their financial interests would be tied to its success because "they'll do anything to make sure the Gov will be successful". Hamilton envisioned an industrial and manufacturing-based economy, inspired by England's robust economic model, in stark contrast to Thomas Jefferson's vision of an agrarian society, which prioritized farming and land ownership.

Hamilton's Strategy: Hamilton "out-foxed Jefferson", employing strategic financial policies and strong arguments to ensure the government's stability by aligning the interests of the wealthy with those of the nation. He believed that a successful government needed the trust and support of affluent citizens, which would create a loyal base of economic support.

Hamilton vs. Jefferson: Differing Ideologies

Hamilton admired England and sought to emulate its capitalist, manufacturing-based economy that he believed would boost the elites. The contrasting vision was held by Jefferson and James Madison, who promoted an ideology where agrarian interests were central, seeing independent farmers as essential to democracy and liberty. Madison wanted elites to invest in manufacturing as well, but he believed this should supplement and not replace agrarianism or undermine the rights of the common man.

Southern Economy

Hamilton viewed the South's slave-based economy as "pre-modern", immoral, and inefficient compared to a free labor market. He believed that a system rewarding hard work with higher pay incentivizes productivity, arguing against slavery's inherent inefficiencies. He posited that economic systems relying on oppressive labor would ultimately stunt economic growth and technological progress.

Inefficiency of Slavery

Hamilton argued that "any system that requires the whip will not be efficient productive". His position emphasized the belief that the freedom to labor and innovate led to a more robust and dynamic economy, whereas slave labor was stagnant and counterproductive.

Constitutional Interpretation: Necessary and Proper Clause

Hamiltonians, or Federalists, interpreted the Constitution, specifically Article I, Section 8, differently from Jeffersonians (Republicans). While the Constitution explicitly lists 17 powers of the national government, Hamilton and the Federalists believed in an implied 18th clause:

18th Clause (Necessary and Proper Clause): This clause grants the national government the power to enact laws "to carry out the 17 clauses". Hamilton argued that it allowed for a flexible interpretation of government powers, enabling the government to adapt to changing needs and realities.

Bank of the United States: Hamilton used this clause to justify the creation of the Bank of the United States, arguing that it was "necessary and proper" to manage taxes and the nation's finances effectively. By establishing a central bank, Hamilton aimed to stabilize the economy, create a national currency, and provide a place for the government to deposit its funds.

Political Ambition: Establishing the Bank of the U.S. was one of the most successful ambitions of Hamilton's tenure, providing the financial infrastructure that would support rapid economic growth and help establish the credit of the United States.

Washington's Stance on the Rule of Law

Washington believed that democratically enacted laws must be obeyed, even if one disagrees with them. He maintained that the legitimacy of the government depended on adherence to the rule of law and that any rebellion against lawful authority would undermine the very foundation of the republic. By upholding this principle, he sought to establish a precedent that would influence American governance for generations.

Jefferson's Opposition and the Tariff

Jefferson secretly opposed any law he deemed "illegitimate" and advised people to break the law. He believed in a more limited government and a strict interpretation of the Constitution, leading him to oppose Hamilton's broader approach to federal power. Washington considered this behavior "reprehensible" and detrimental to the unity and stability of the young nation, viewing such opposition as a potential threat to the nascent democracy's health and coherence.

The Hamiliton Program