What did Alexander Hamilton think was the best type of economy?
Alexander Hamilton's vision for the American economy was, in a word, modern. Modeled after the evolving British system, he favored centralizing the American economy with a national bank and by federal assumption of state debts, a process which would be financed by the issuing of federal securities, high tariffs, and an excise tax. While these measures seem very modest by today's standards, in their day they were a substantial departure from the decentralized political economy that prevailed during the period immediately following the Revolution. Hamilton's vision for the economy was motivated by a desire to put the nation on a sound financial footing in its early years and also by a sincere belief that the government needed to have substantial powers to hold the nation together. He thought that the new nation would flourish best by serving the interests of the nation's financial elites, especially in the merchant and credit houses of Philadelphia and New York. The support of these individuals would be vital in securing the credit and the political future of the United States.
In addition to high finance, Hamilton thought the nation's future lay in manufacturing. In a report delivered to Congress, he argued that the United States ought to take measures to encourage industry, including protective tariffs, which he said, in his typical prose, "wear a beneficent aspect toward the manufacturers of this country." His program for the development of manufactures was in fact connected to his financial plan--a centralized economy would put capital in the hands of those who could employ it in manufacturing ventures. In this way, he said, "the public purse must supply the deficiency of private resource.
Every aspect of Hamilton's economic program was anathema to Thomas Jefferson and an emerging political faction that was frightened by the increase in centralized power it seemed to involve. Believing the nation's future lay in agriculture, and fearing the development of a British-style system that they saw as corrupt, they initiated one of the first major political conflicts in the history of the Republic in opposition to his plans.