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 Hamilton, who served as Secretary of the Treasury under
President George Washington, was instrumental in establishing the modern system
of American capitalism. Hamilton, a leading member of the Federalists, was an
influential adviser to President George Washington and an influence on Supreme
Court Chief Justice John Marshall.
Hamilton was considered the “chief architect of the Washington
administration’s policies.” Forrest McDonald, who was a leading historian of the
American Founding and biographer of Hamilton, argued that “Hamilton’s fiscal
system, which breathed life into the Constitution, was an example of
conservatism – of constructive, prudential change – at its best.” Hamilton’s
policies which consisted of paying down Revolutionary War debts, establishing
the first Bank of the United States, and establishing a system of tariffs.
Hamilton’s economic program placed the nation onto a path of a sound economy.
His policies were later continued and advocated by the Whig Party under the
leadership of Henry Clay of Kentucky and Daniel Webster of Massachusetts. Both
Clay and Webster pushed the American System, which was a system of economic
nationalism and reflected the Hamiltonian economic goals of economic
development.
As Treasury Secretary, Hamilton also delivered a number of reports to Congress,
most notably his Report on Manufactures. Hamilton, a veteran of the American
Revolutionary War who helped lead the victory at the Battle of Yorktown,
understood the need not only for a strong economy and financial system, but the
nation could not be dependent upon foreign nations. “Hamilton’s report would
become our blueprint of economic independence,” wrote Patrick J. Buchanan.
Coolidge wrote that Hamilton “desired his country to be self-sustaining and
self-sufficient.” “Conservative statesman from Alexander Hamilton to Ronald
Reagan sometimes supported protectionism and at other times they leaned toward
lowering barriers. But they always understood that trade policy was merely a
tool for building a strong and independent country with a prosperous middle
class, wrote Ambassador Robert Lighthizer, who served as United States Trade
Representative in President Donald Trump’s administration.
 What
would Hamilton think of our dependency today on foreign nations, even hostile
nations such as China, for necessities? Overtime the United States has
outsourced much of our manufacturing base in pursuit of free trade and
globalization. The COVID-19 pandemic demonstrated that we have outsourced too
much, including crucial medical and pharmaceutical supplies.
As McDonald wrote, “Hamilton rejected laissez-faire theories…., but “proposed,
therefore, to use government to encourage economic change,” while “emphatic in
his reliance upon voluntarism and capitalism.” Both the Federalists and the
Whigs followed an economic policy that was nationalistic in nature. The
Republican Party continued the political philosophy of Hamilton and the Whigs
through the leadership of President Abraham Lincoln and the Gilded Age
administrations, most notably, the administration of President William McKinley.
Both President Warren G. Harding and President Coolidge were influenced by
Hamilton’s political and economic philosophy.
“The party now in power in this country, through its present declaration of
principles, through the traditions which it inherited from its predecessors, the
Federalists and the Whigs, through their achievements and through its own, is
representative of those policies which were adopted under the lead of Alexander
Hamilton,” stated Coolidge in reflecting on Hamilton’s influence upon the
Republican Party.
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Andrew Mellon, who served as Secretary of the
Treasury in the administrations of President Harding, Coolidge, and
Herbert Hoover, was also influenced by Hamilton’s philosophy.
Mellon’s distinguished service as Secretary of Treasury also earned
him the compliment of being referred to as the greatest Treasury
Secretary since Alexander Hamilton. “Alexander
Hamilton, whose genius was responsible for the establishment of our
financial system, early committed this Government to a policy of
debt payment and keeping expenditures within income,” wrote Andrew
Mellon. It was these principles that drove both the Harding and
Coolidge administrations. Reducing government spending, lowering tax
rates, and paying down the national debt were all important policies
of the 1920s, which led to substantial economic growth.
The Harding and Coolidge administrations serve as an example for
policymakers in how to address issues of spending, taxation, debt,
trade, and immigration. Harding and Coolidge followed a conservative
Hamiltonian approach to all these issues.
Hamilton may be seen by some as a proponent of “big government,”
which to a certain extent he was in compared to some of his
contemporaries — most notably Thomas Jefferson, but his economic
policies not only saved the young republic but created the American
capitalistic system. Although Hamilton and Jefferson disagreed,
Hamilton’s philosophy was not the beginning of modern liberalism or
progressivism. As Michael P. Federici wrote in The Political
Philosophy of Alexander Hamilton:
Hamilton was not a libertarian, but he was not an advocate of the
managerial state either. His view of human nature would not have
allowed either the faith in economic anarchy suggested by
libertarians or the heavily regulated state advocated by Keynesians.
Hamilton’s policies lack enough of the Gnostic flavor of Jacobinism
or Progressivism to consider his political economy an antecedent to
modern American liberalism. They were not designed or intended to
eradicate poverty, fear, want, as FDR’s New Deal was designed to do,
and they did not aim to dramatically change the scope of
government’s role in individual lives. Hamilton’s objections were
far more modest. Federici’s argues that “Hamilton’s
political economy becomes sober to the point of being incompatible
with later ideologies and developments in American history, like the
New Deal, the welfare state, and the managerial state.”
“Above all, Hamilton understood the powers of government to be
limited—not only by the written law of the Constitution, but also by
the natural rights affirmed by the consensus of the Founding
generation. Hamilton favored an activist federal government, but he
did so on grounds and within limits that are recognizably part of
the American conservative and constitutional tradition,” wrote
Carson Holloway, a Professor of Political Science at the University
of Nebraska, Omaha.
 Conservatives often champion Thomas Jefferson as a hero, but
Hamilton provides the best example of a prudent conservative
statesman. Coolidge and other conservatives understood the
importance of Hamilton and today’s conservatives should embrace his
conservative nationalism.
President Coolidge was correct when he wrote “when America ceases to
remember his greatness, America will no longer be great.”
John Hendrickson serves as policy director for Tax
Education Foundation of Iowa |
