Financial History Issue 113 (Spring 2015) | Page 19
Alexander Hamilton
By Thomas Fleming
In 1791, Secretary of the Treasury Alexander Hamilton submitted two new proposals in his ongoing plan to restore America’s ruined credit at home and abroad.
Secretary of State Thomas Jefferson and
Congressman James Madison, leader of
the House of Representatives, had quarreled angrily with Hamilton about the first
stage of his program — the government’s
redemption of all outstanding debts, both
state and federal, without any attempt to
discriminate in favor of those who had
George Washington
held the original notes and sold them from
financial necessity.
The first of these new proposals — a tax
on whiskey — aroused little or no acrimony. Most people, including Jefferson
and Madison, seemed to think it was a
relatively painless way to increase the
flow of revenue into federal coffers. Hamilton’s argument that the money would
enable the government to pay its current
expenses and make regular payments on
the national debt had considerable appeal.
There was a fair amount of debate on the
subject. Albert Gallatin, a newly- elected
Congressman from western Pennsylvania,
joined other spokesmen for this region in
warning that the measure would someday
lead to violent protests. But the whiskey
tax passed the House and Senate with
comfortable majorities early in 1791.
Secretary Hamilton’s second proposal,
A Bank of the United States, was another
matter. There was nothing in the Constitution empowering Congress to launch
a bank. Nevertheless, President George
Washington favored the idea. He had not
mastered all the intricacies of Hamilton’s
bank, but he was a believer in banks as
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