The growth trajectory of the American economy in the last two centuries will reinforce the lasting legacy of Hamilton’s ideas. Firstly, the financial panic of 1792 was largely withstood due to the safety mechanisms already put in place by him as Secretary of the Treasury. The policies of economic nationalism proposed by Hamilton had been pivotal in the United States catching up leading economies of the nineteenth century like Britain. By the time Hamilton’s term as Secretary of Treasury was completed in 1795, the United States economy was comprised of six crucial institutional elements that continue to shape contemporary economic outcomes as well. These are “stable public finances and debt management; stable money; an effective central bank; a functioning banking system; active securities markets; and a growing number of business corporations, financial and non-financial”. (Rust, 1999, 46)
Such economic foundations laid by Hamilton also contributed to lifting agrarian and backward regions such as the American South and West toward industrialization. The effects are easy to see, as by the end of the nineteenth century, the South was home to several manufacturing industries. One could trace the eventual economic and industrial development of the United States to the reports Hamilton presented to the Congress in his capacity as the Secretary of Treasury. His key insights in matters of public credit, manufacturing and national banking would transform the country’s economy from agrarian to industrial. (Rust, 1999, 46)
And finally, the real importance of Hamiltonian ideas and initiatives can only be realized by comparing his efforts to that of modern day economists. In recent decades, many analysts have credited Alan Greenspan for keeping afloat the economic system during the Wall Street crash of 1897, the Russian Long-Term Capital Management (LTCM) crisis of 1998, the busting of the stock-market bubble in 1999, etc. But Greenspan’s accomplishments pale in comparison with that of Hamilton, who handled the crisis in 1792 without having the advantages of crisis-management theories and historical statistical data to base his analysis on. Indeed, the resolution of financial crises in early U.S history clearly demonstrates that it was Hamilton, as opposed to Keynes, Bagehot or Greenspan, who should be credited with developing many key modern central-banking crisis-management techniques (Sylla et. al. 2009, 63). Hence, his influence on the American economic system continues to this day and his legacy as one of the founding fathers of this vibrant republic is well-deserved.
Miller, John C. 1959. Alexander Hamilton: Portrait in Paradox. New York: Harper & Brothers.
Rust, Michael. 1999. Hamilton’s Ups and Downs: Scholars Revive Interest in a Misunderstood Founding Father, Alexander Hamilton, Whose Pragmatic Ideas Could Help the United States through Its Current Confusion. Insight on the News, May 17, 45+.
Sylla, Richard, Robert E. Wright, and David J. Cowen. 2009. Alexander Hamilton, Central Banker: Crisis Management during the U.s. Financial Panic of 1792. Business History Review 83, no. 1: 61+.
White, Richard D. 2000. Political Economy and Statesmanship: Smith, Hamilton, and the Foundation of the Commercial Republic. Public Administration Review 60, no. 2: 186.