Public Finance in the Early United States: How Alexander Hamilton Combined Scottish Political Philosophy, English Mercantilism, American Federalism and Legal Construction with Bareknuckle Politics to Establish the Bank of the United States and Promote His Views of National Grandeur

Abstract

This paper focuses most proximately on the efforts of the Federalists, specifically and arguably most influentially by Alexander Hamilton, to tackle one of the most pressing issues facing the new republic after independence – the inability of the government of the United States to pay the debts it incurred during the revolutionary war and, more generally, to provide durable support for the public credit. While much attention has been paid by scholars to one aspect of Hamilton’s famous plan – the National Bank, and questions surrounding its’ Constitutionality – our focus is only partially concerned with that debate. Instead, this paper will attempt to show, by examining the arguments put forth by leading Federalist politicians from 1775-1790 to support a plan for the public credit and the national economy more broadly and by reviewing the historical, ideological and political context in which they were made, that Hamilton and the Federalists were operating more as effective political pragmatists promoting a specific view for the future of the United States as a mercantile trading power than as philosophical or constitutional ideologues.Specifically, we will argue that while Hamilton’s political philosophy – rooted in Hume and other Scottish Enlightenment thinkers – certainly did frame his worldview, and his legal arguments – which echoed Wilson and Blackstone – certainly were logical, it was often his economic thinking – borrowed from Smith, Steuart, Walpole and the Bank of England – which was most often brought to bear in his arguments for supporting the public credit. Additionally, this paper will suggest that while this approach proved successful in the short term in winning the day to charter the Bank and nudging the country toward Hamilton’s vision, the various arguments that the Federalists had marshalled in their support failed to provide a stable long term foundation for the bank and, more broadly, failed to reconcile in any meaningful way the ideological divides in the early United States.