SOURCE: "Alexander Hamilton's Place in the Founding of the Nation," in American Themes: Selected Essays and Addresses of John Allen Krout, edited by Clifford Lord and Henry F. Graff, Columbia University Press, 1963, pp. 19-32.

[In the following essay, originally a paper delivered before a meeting of the American Philosophical Society in 1957, Krout stresses Hamilton's importance as a pioneer American economist and advocate of centralized government.]

Every successful nation-builder of modern times—Colbert in the seventeenth century, the elder Pitt in the eighteenth, Cavour and Bismarck in the nineteenth—understood the relation of economic strength to political power, and the links between each of these and national security. Alexander Hamilton was no exception. If he seems, at times, to tower above the others in that company of talented men who brought into being the United States of America, it is because he stated more precisely and more forcefully than most of his fellows the principles which would enable his generation to use economic policy as an instrument to achieve both national unification and national power. He was not concerned primarily with the development of a consistent theory or the formulation of an ideal system. His thinking about national power was strongly conditioned by two facts: first, that the young Republic was an almost insignificant weakling in the power politics of western Europe, and second, that despite the influence of the American Revolution and the immediate impact of Adam Smith's Wealth of Nations, the theories and practices of mercantilism still dominated the thought and action of those who wielded political power.

It is useless to speculate on the course which Hamilton might have taken, had conditions been different; but there is fascination in reading his eloquent exposition of the international advantages of free trade which appears in the opening paragraphs of his Report on Manufactures, submitted to the Congress in 1791. Here is no mercantilist brief, no slavish copying of British practices. It is a convincing demonstration of one of Hamilton's greatest sources of strength as a political realist—his courageous facing of the facts, however intricate, whenever he chose a plan of action.

Action, not theory, was the central theme of his entire career. There was little of the cloistered study about him. From his early years on St. Croix in the British West Indies to the hour he left Washington's Cabinet, he found himself trying to resolve increasingly complicated problems rather than to formulate logical theories. Even in little King's College, where the academic pace was much too leisurely for him, he became involved in public affairs. To be sure, he worked hard on the classics and moral philosophy; he read rapidly in Plutarch's Lives, Bacon's Essays and Hobbes's Dialogues, but nothing could keep him out of the momentous debate between colonies and mother country. His pen was soon active in the war of pamphlets, and so effective was his argument that he had established a reputation as one of the abler writers of his generation before the first shots were fired at Lexington and Concord.

For Hamilton the war years, in spite of his close association with Washington, were cruelly disappointing. His craving for military fame was never satisfied; yet his military service inspired, or at least did not seem to impede, his logical thinking about the problems that caught his imagination. His brilliant reports on army organization and administration, as well as his penetrating analysis of the business of raising money to fight a war, still make exciting reading. Notable as these contributions to our military annals were, they seem inconsequential compared to the essay, in the form of a letter addressed to Robert Morris, which he put into the post on the very day in 1781 that he resigned as Washington's aide.

This message to Morris, newly established in his position as Superintendent of Finances, looms larger the longer one contemplates it. Here Hamilton, just past his twenty-fourth birthday (or his twenty-sixth, if one accepts the most recent calculations of historical scholars), boldly stated the principles essential for the building of a strong nation. Some of his associates had heard his thesis in fragmentary form on other occasions; but he had never indicated so explicitly how he would use political power, if it ever came to him. His plan was much too bold for Morris, who was naturally cautious, in spite of his financial speculations, and at the moment uncertain of his own ability to lead. The Financier could not know that his young correspondent had actually provided him with a workable blueprint for the next decade—and for generations thereafter.

But nothing that Hamilton wrote in later years reveals any more clearly the shape of a nation in the making. Out of his awareness of local prejudices, provincial rivalries, and the clamor for state sovereignty came his insistence that the Republic, to which he was emotionally devoted, must begin to "think continentally." Out of his contempt for the vague and the visionary, he fashioned a plan that was difficult but possible, bold but not dangerous, furthering the self-interest of men of property but cleverly contrived to use that self-interest for the public good. He did not fall into the error of so many in his generation, who persisted in confusing the economy of the private household with the principles of public finance.

What the nation needed most, Hamilton argued, was a currency adequate to its business needs and financial credit sound enough to command international confidence. Both could be provided by a national bank under public auspices, but attractive to private capital. Such an institution would

create a mass of credit that will supply the defect of moneyed capital, and answer all the purposes of cash; a plan which will offer adventurers immediate advantages, analogous to those they receive by employing their money in trade, and eventually greater advantages; a plan which will give them the greatest security the nature of the case will admit for what they lend; and which will not only advance their own and secure the independence of their country, but, in its progress, have the most beneficial influence upon its future commerce, and be a source of national wealth and strength.

Hamilton admitted that the "national wealth and strength" would be dependent upon the willingness of the government to borrow against its future and to pledge complete repayment of all its debts. He quickly tried to quiet the opposition of those who feared such a burden by characterizing a national debt as "a national blessing." "It will be a powerful cement of our union. It will also create a necessity for keeping up taxation to a degree, which, without being oppressive, will be a spur to industry." Probably no part of Hamilton's plan came closer to the English model, which he so greatly admired, and certainly no other feature was so violently attacked.

The financial proposals in the 1781 memorandum were less startling than the frank revelation of his political nationalism. On this theme his words were never to be "sicklied o'er" with moderation. The weaknesses of the Continental Congress, the lack of a strong central government, could not be corrected by the Articles of Confederation, which had just been ratified. A century and three-quarters after the event, one cannot read his words without being convinced of the genuineness of his alarm. "Disastrous dissolution" would be the fate of the Republic at its very beginning unless Congress was given "complete sovereignty in all but the mere municipal law of each state." "I wish to see a convention of all the States, with full power to alter and amend, finally and irrevocably, the present futile and senseless Confederation." It is no exaggeration to regard this as the "first call" for the Constitutional Convention which finally met in May, 1787.

Almost forty years ago Henry Jones Ford insisted that the events of 1787 constituted for the young New Yorker his "wonderful year." And so it was. This was the time when Hamilton began to build on the blueprint of 1781. He had help in construction, but there is a large measure of truth in the assertion of some historians that we owe to Hamilton more than to any other person the fact that we have a federal constitution and that we are a union rather than a league of jealous and warring states. His was the determination, the fixed objective, the steady hand. Much has been made of his relatively minor role in the Philadelphia Convention, his dislike of both the New Jersey and the Virginia plans and his own futile proposal of a plan of government as close to the "English model as circumstances and the temper of the people would permit." "I have no scruple," he declared, "that the British government is the best in the world and I doubt much whether anything short of it will do in America."

Such a sentiment went against the silence with which the Convention treated his proposals, and his speedy departure for New York, seems to mark his complete failure at Philadelphia. But this is a superficial view. It was Hamilton, neither Washington nor Madison nor Jay nor Franklin, who had made the Constitutional Convention possible. He had moved from the feeble conference of Virginia and Maryland commissioners at Mount Vernon in 1785 to the unsuccessful convention a year later at Annapolis, attended by representatives of only five states. But with Madison's help he used failure at Annapolis as the sounding board against which to issue the call for a meeting in 1787 that was successful. Hamilton's departure from Philadelphia was not the act of a leader too stubborn to compromise, who sulks at the first rebuff. So it has been portrayed by some of his biographers; but they are mistaken. He used the weeks from June 30 until September 2, when he returned to Philadelphia, in trying to overcome hostility to the whole idea underlying the Convention and in preparing men's minds for whatever compromise the delegates might finally approve.

His persuasive efforts involved no speeches, no appearances before mass meetings, no appeals to the crowd. Hamilton's medium was the written word. As a political essayist, he was unsurpassed. His articles appeared in the press, his encouraging letters went to Washington and Rufus King in the Convention, to Jeremiah Wadsworth, David Humphreys, and other friends in New England, advising them how to answer the Convention's foes. It was a period of preparation for the defense of the Constitution that was to come. Indeed, some of the letters of this period may have been as influential as some of the essays that comprise The Federalist.

Anyone who reads widely in the incomparable Federalist essays, in which Madison and Jay joined Hamilton, will quickly realize what Thomas Jefferson meant when he said "in some parts it is discoverable that the author means only to say what may be best said in defense of opinions in which he did not concur." He could not have come closer to the mark, if he had known that he was really aiming at Hamilton, for the young New Yorker never tried to conceal his disagreement with many of the provisions of the Constitution—though he gladly signed it. It was the measure of his statesmanship—that he put his own opinions aside, overcame his personal prejudices, and accepted the document as the only safeguard against "disunion and anarchy." Having made that decision, he never wavered in his public support of the work of the Convention. He wrote the major portion of the Federalist essays, which Jefferson praised as "the best commentary on the principles of government which ever was written"; and no American voice has ever dissented from that appraisal.

Hamilton's contemporaries, as well as his biographers, have been in substantial agreement that his own effort was the deciding factor in persuading New York to ratify the proposed Constitution at the Poughkeepsie Convention in 1788. When the document became fundamental law the following year, his most important work was actually finished. He had made his great gift to his fellow countrymen. He had shown them how their slender resources might be marshaled effectively to provide the national defense and domestic tranquility which they so sorely needed. His whole fiscal and financial program, as Secretary of the Treasury, had been explicitly stated years before he entered Washington's cabinet. However remarkable the famous Reports of 1790 and 1791, they rest securely on political foundation stones which Hamilton had set a decade earlier: first, the business and propertied classes generally must be tied by bonds of self-interest to the national government; and second, public policy should be directed toward the encouragement of economic diversification—including manufacturing and commerce as well as agriculture—capable of creating an integrated national economy and a firm political union.

The translation of his policies into law was a major triumph for the Secretary of the Treasury, but it was less important for the young Republic than the imaginative formulation of the principles out of which the policies grew. Indeed, the years during which Congress accepted the financial program known as the "Hamiltonian System" were marred by the blunders of the man who had written the legislation. Hamilton was not content to serve merely as a Chancellor of the Exchequer. He never overcame his desire to be regarded as the Prime Minister. He gave Washington advice, even when the President had not requested it, on foreign policy, legal affairs, military problems, and matters of protocol. In the process he established precedents which are still followed, but he also alienated associates in the government whose support would have been invaluable.

Perhaps Hamilton's greatest weakness in the half dozen years of the apparent triumph of his fiscal and economic policies was his failure to understand how rapidly the political opinions of his fellow countrymen were changing. Between the inauguration of George Washington and the election of Thomas Jefferson in 1800 a process of education in democracy had been going forward steadily. Wherever Hamilton encountered this process, he was inclined either to oppose or to ignore it. He refused to see that the Jeffersonian doctrine of "the cherishment of the people" encouraged the greatest possible diffusion of political power among a progressively educated body of citizens. Instead, he regarded the Republicans, who carefully nurtured the Jeffersonian doctrine, as a group of fractional insurgents, too quick in their imitation of the French Jacobis. But the Republicans had sensed the temper of this generation. To their standard rather than to the symbols of the Federalist party, the new voters were drawn. As a result, Hamilton and his associates were able only to design and construct the new edifice of government; men motivated by a broader concept of their civic responsibility moved in and took over the completed structure.

They did not dare, however, to destroy Hamilton's design. Indeed, they modified but slightly the precedents which he had set. Federalist institutions, even Federalist policies, survived, surprisingly intact. The Bank and the public funds remained undisturbed. The military and naval establishments, though reduced in size, were not abolished. The hated excise tax was repealed and other internal revenue duties were modified; but the Republicans in Congress initiated no general assault on the powers of the central government, which Hamilton had done so much to create.

Many Americans today are inclined to regard the first Secretary of the Treasury as merely an adroit politician, brilliant and versatile, but no greater in his influence on later generations that the short-lived Federalist party to which he belonged. A partisan leader he was, and a determined one. Yet no strategy of his in the political arena, not even his triumph in persuading the First Congress to accept his fiscal plans, can compare with the persistent force of his economic ideas. His critics, as well as his friends, recognized that during his years of service in Washington's cabinet he seemed to do the thinking for the administration.

The leaven of Hamilton's thought in time brought action even within the ranks of the Jeffersonian Republicans. By 1815 the leaders of the faction, dubbed the "War Hawks," had accepted a nationalistic program highly imitative of the "Hamiltonian System." Though they had won no decisive victory over the British during the War of 1812, they had captured President Madison and persuaded him to accept their program. It was, therefore, James Madison, once Thomas Jefferson's chief lieutenant, who wrote the proposals of the economic nationalists into his presidential message of December, 1815. Josiah Quincy, Massachusetts Federalist, listening to that message, sarcastically remarked that the Republican party had "out-Federalized Federalism"; for Madison asked the Congress to approve (1) a liberal provision for national defense, (2) governmental aid for the construction of roads and canals, (3) encouragement to manufacturers by means of a protective tariff, and (4) the re-establishment of a National Bank. Though the words were Madison's, many in both House and Senate must have been thinking of Alexander Hamilton.

The response of the Congress was quick and enthusiastic. A committee of the House, headed by John C. Calhoun, reported a bill to establish a Bank of the United States, not unlike the First Bank which had ceased to exist with the expiration of its Charter in 1811. A few of the "Old Republicans," like John Taylor of Virginia, protested against this "surrender to the money power," but most of their Republican colleagues accepted the Bank as a necessary extension of the powers of the national government. Henry Clay, with a characteristically dramatic flourish, rose to confess that he had spoken vigorously against the recharter of the old Bank in 1811, but that he was now sacrificing consistency for the welfare of his country. The sense of high drama must have been heightened for those among his hearers who realized that his eloquent speech closely followed Hamilton's arguments in 1791, when he wrote for Washington a defense of the constitutionality of the first Bank bill.

Nor was Henry Clay the only leader in his generation who turned to the writings of Hamilton for inspiration, even for the effective phrasing of ideas. John Marshall, then brilliantly engaged in reenforcing the spirit of nationalism, presided over a Supreme Court that handed down a series of opinions calculated to strengthen the federal government and to give judicial sanction to the doctrine of the implied powers to be derived from the Constitution. Few decisions have had greater influence on the course of constitutional government in this country than Marshall's opinion in the case of McCulloch vs. Maryland in 1819. His vigorous argument, upholding the power of Congress to charter a bank, was actually a rephrasing, in somewhat more legalistic terms, of Hamilton's classic exposition of the doctrine of implied powers.

Though sectional rivalries and partisan politics thwarted the plans of these economic nationalists early in the nineteenth century, their followers in a later generation carried similar views into the Republican party. Young Abraham Lincoln in Illinois, a devoted supporter of Henry Clay and the American System, was but one of many whose imagination was quickened by the spirit of nationalism that pervades every public paper written by Alexander Hamilton. Consider, for example, Lincoln's first political speech. The report of it may be apocryphal; yet the tone is so characteristic of him that it almost compels acceptance. In announcing his candidacy for the Illinois state legislature early in 1832, he said:

I presume you all know who I am. I am humble Abraham Lincoln. I have been solicited by many friends to become a candidate for the Legislature. My politics are short, and sweet, like the old woman's dance. I am in favor of a national bank. I am in favor of the internal improvement system, and a high protective tariff. These are my sentiments and political principles. If elected, I shall be thankful; if not, it will be all the same.

Though the personal mood is alien to Hamilton, the political program is his.

Surely it is not merely the eye of fancy that sees in the Congressional legislation of the Civil War years some of the greatest triumphs of the Hamiltonian philosophy. His ideas were but slightly modified by those who championed such laws as the protective tariffs of 1862 and 1864, the granting of federal lands to the Union Pacific and Central Pacific railroads, the establishment of a national banking system in 1863, and the passage of a contract labor law to stimulate European immigration. Every one of these measures received the approval of the Illinois "railsplitter" in the White House, who had dedicated his life to the preservation of the Union which Hamilton had done so much to build.

It is wise for us to remember that Hamilton, like every worthy statesman, spoke and wrote in context. His United States of America was a young and relatively insignificant republic in the great family of nations. His task was to give it energetic leadership in the uncertain years of its infancy. His loyalty transcended every parochialism and embraced the nation. His quest was for national strength, and he used skillfully whatever resources promised to be most effective. Among the founders of this nation none argued more eloquently than he for that combination of private enterprise and governmental policies which has made industrial America what it is today. And none succeeded so well in translating theory into action.