Alexander Hamilton LO 3

Summary

This script delves into Alexander Hamilton's vision for the U.S. financial system, modeled after the Bank of England. It highlights the establishment of the Bank of the United States in 1791, which faced constitutional debates between Hamilton and Jefferson. Hamilton's 'necessary and proper' clause argument prevailed, setting a precedent for a national bank to stabilize the economy and facilitate commerce. The script also touches on the implications for states' rights and the emergence of America's two-party system.

Takeaways

• 🏦 Hamilton admired the Bank of England and proposed a similar powerful private institution with federal government involvement.
• 📈 The federal government would be a 20% stockholder, and the bank would stimulate business by keeping federal funds in circulation.
• 💵 The bank aimed to print urgently needed paper money and create a uniform currency to simplify business transactions.
• 🌐 The Bank of the United States was created in 1791 with a central branch in Philadelphia and branches in major cities.
• 📊 The bank's shares were sold out in less than four hours, indicating its popularity and the public's support for the program.
• 👥 The board of directors consisted of 25 men, with the president appointing five and the rest chosen by private stockholders.
• 📜 The bank's charter sparked a major debate on constitutional principles, with Jefferson arguing against its constitutionality.
• 📝 Hamilton countered with a 'Defense of the Constitutionality of the Bank,' invoking the 'necessary and proper' clause of the Constitution.
• 🤝 Jefferson's stance on the bank changed when he became president, adopting a more Hamiltonian interpretation of the Constitution.
• 💼 Hamilton's programs, including the bank, created a strong national economic policy and a permanent national debt, only paid off once in 1835.
• 💼 These programs bolstered faith in government credit, stabilized the economy, and moved towards a uniform currency system.

Q & A

Who was the main proponent of the National Bank in the United States?

Alexander Hamilton was the main proponent of the National Bank in the United States.

What was the inspiration for Hamilton's National Bank model?

Hamilton's National Bank model was inspired by the Bank of England.

What role would the federal government play in Hamilton's proposed bank?

In Hamilton's proposed bank, the federal government would be a 20% stockholder and the federal treasury would deposit its surplus monies there.

What was the purpose of the bank printing paper money?

The bank would print paper money to provide a sound and stable national currency, which was desperately needed due to competing currencies and the lack of a uniform currency system.

How did Hamilton argue for the necessity of a central bank for the growing financial community?

Hamilton argued that a central bank was necessary to facilitate increasingly complex commercial transactions.

When was the Bank of the United States created by Congress and for how many years was it chartered?

The Bank of the United States was created by Congress in 1791 and it was chartered for 20 years.

How many shares of stock did the Bank of the United States initially offer and at what price?

The Bank of the United States initially offered 25,000 shares of stock at $400 each.

What was the government's role in the Bank's board of directors?

The president appointed five of the 25 men on the board of directors, while the remaining 20 were chosen by private stockholders.

What constitutional principle was debated in relation to the Bank's charter?

The constitutional principle debated was whether Congress had the authority to establish a national bank, with Jefferson arguing against it based on a strict interpretation of the Constitution.

What essay did Hamilton prepare to defend the constitutionality of the bank?

Hamilton prepared an essay entitled 'Defense of the Constitutionality of the Bank' to argue for the bank's constitutionality.

How did Hamilton justify the issuing of charters to national banks based on the Constitution?

Hamilton justified it by referencing Article 1, Section 8, Clause 18 of the Constitution, which gives Congress the power to make all laws necessary and proper for carrying into execution its powers.

What was the long-term impact of Hamilton's programs on the American economy?

Hamilton's programs bolstered faith in the government's credit, stabilized the economy, and moved towards a uniform currency system, creating a strong national economic policy and a permanent national debt.

Outlines

00:00

🏦 Hamilton's National Bank Proposal

This paragraph discusses Alexander Hamilton's vision for a national bank, modeled after the Bank of England. He proposed a private institution with the federal government as a 20% stockholder. The bank would serve as a secure repository for federal funds and stimulate business through circulation. It would also print paper money to address the issue of competing currencies and establish a uniform currency system. The Bank of the United States, established in 1791, was to have a central branch in Philadelphia and branches in major cities. The bank's shares were sold out quickly, reflecting public interest. The bank's charter sparked a constitutional debate, with Jefferson arguing against its establishment based on a strict interpretation of the Constitution, while Hamilton defended its constitutionality using the 'necessary and proper' clause.

05:02

💼 Hamilton's Economic Policies and Impact

The second paragraph highlights the broader economic policies of Alexander Hamilton, which included funding domestic debt and establishing a national bank. These policies laid the foundation for a strong national economic policy and created a permanent national debt, only paid off once in 1835 by Andrew Jackson. Hamilton's approach bolstered confidence in government credit and stabilized the economy and money supply through a sound banking program and a move towards a uniform currency system. These policies also set the stage for the development of America's two-party system, with Hamilton and Jefferson representing opposing views on the role of the federal government in the economy.

Keywords

💡National Bank

The National Bank refers to the Bank of the United States, which was proposed by Alexander Hamilton as a powerful private institution modeled after the Bank of England. It was intended to serve as a central financial institution for the federal government, facilitating business transactions and providing a stable currency. In the script, it is highlighted as a key part of Hamilton's economic plan to stabilize the economy and create a uniform currency system.

💡Hamilton

Alexander Hamilton was a Founding Father of the United States and the first Secretary of the Treasury. In the video, he is noted for his admiration of the English banking system and his proposal to create a similar institution in the U.S. His vision for the National Bank was central to his broader economic policies, which aimed to strengthen the federal government's financial position and establish a stable currency.

💡Bank of England

The Bank of England is a central bank and financial institution in the United Kingdom, which served as a model for Hamilton's proposed National Bank. It is mentioned in the script as the inspiration for the Bank of the United States, emphasizing the influence of English financial institutions on early American banking practices.

💡Federal Treasury

The Federal Treasury refers to the financial department of the U.S. government responsible for managing the country's finances. In the context of the script, the Federal Treasury would deposit its surplus monies in the National Bank, making it a convenient repository for government funds and a means to stimulate business by keeping these funds in circulation.

💡Paper Money

Paper money, or banknotes, is a type of currency that is not backed by physical commodities like gold or silver but is issued by a government or financial institution. In the script, the National Bank is tasked with printing urgently needed paper money to provide a stable national currency, replacing the various competing currencies that existed at the time.

💡Uniform Currency

A uniform currency refers to a standardized form of money that is accepted and used throughout a country or region. The script discusses the need for a uniform currency in the U.S. to facilitate easier communication and business transactions, as opposed to the competing currencies and bank-issued money that were prevalent at the time.

💡Constitutionality

Constitutionality pertains to the question of whether a law or action is consistent with the constitution of a country. The script highlights the debate over the constitutionality of the National Bank, with Jefferson arguing against it and Hamilton defending it based on the 'necessary and proper' clause of the U.S. Constitution.

💡Necessary and Proper Clause

The Necessary and Proper Clause, also known as the Elastic Clause, is a clause in Article I, Section 8 of the U.S. Constitution that grants Congress the power to make all laws necessary and proper for carrying out its enumerated powers. In the script, Hamilton uses this clause to argue for the constitutionality of the National Bank, asserting that it is within Congress's power to establish such an institution.

💡Stockholders

Stockholders are individuals or entities that own shares in a company, thereby having a stake in its success. In the context of the script, the Bank of the United States was to be owned by stockholders, with the federal government holding 20% and the remaining 80% being sold to the public. This arrangement was part of the bank's structure as a private institution with government involvement.

💡Board of Directors

A board of directors is a group of individuals elected by the stockholders of a company to oversee the company's management. In the script, the Bank of the United States had a board of 25 directors, with the president appointing five and the remaining 20 being chosen by private stockholders. This board was responsible for managing the bank's operations.

💡Two-Party System

The two-party system refers to a political system in which two major parties dominate the political landscape. The script mentions that the debate between Hamilton and Jefferson over the National Bank and other economic policies laid the groundwork for America's two-party system, with each side representing different economic and political ideologies.

Highlights

Hamilton admired the English banking model and proposed a private institution with federal government involvement.

The bank would serve as a strong box for federal funds and stimulate business by keeping funds in circulation.

The bank aimed to print paper money to address the urgent need for a stable national currency amidst competing currencies.

Hamilton argued for a central bank to facilitate increasingly complex commercial transactions.

The Bank of the United States was created by Congress in 1791 with a 20-year charter.

The bank had a central branch in Philadelphia and branches in major cities, selling 25,000 shares of stock.

The government bought 20% of the bank's stock, with the remaining 80% sold to the public within four hours.

The bank's board of directors consisted of 25 men, with the president appointing five and private stockholders choosing the rest.

Jefferson argued that Congress lacked the authority to establish a national bank based on a strict interpretation of the Constitution.

Hamilton disagreed, preparing an essay defending the constitutionality of the bank based on the 'necessary and proper' clause.

Hamilton's argument for implied powers was a new doctrine not anticipated by Madison or Jefferson.

Jefferson later adopted a looser interpretation of the Constitution as president, similar to Hamilton's.

Hamilton's programs, including the bank, encroached on states' rights and contributed to the framework of America's two-party system.

The debate between Hamilton and Jefferson set the stage for the two-party system that would be further examined in later lectures.

Hamilton's economic policy created a permanent national debt, only paid off once in 1835 by Andrew Jackson.

His programs bolstered government credit and stabilized the economy by providing a sound banking program and moving towards a uniform currency system.

Hamilton's approach to the economy was characterized by a mix of skillful planning and a gambler's confidence.

Transcripts

all right welcome aboard uh to the

report on the national bank

um

so as mentioned before hamilton was a

great admirer of the english hamilton

model his bank of

his bank after the bank of england he

proposed a powerful private institution

of which the federal government would be

a 20 stockholder

in which the federal treasury would

deposit its surplus monies

the federal government would not only

have a convenient strong box but federal

government funds would stimulate

business by remaining in circulation the

bank would also print

urgently needed paper money and thus

provide

a sound and stable national security

which was desperately needed because

there was all sorts of competing

currencies states had the right to

print their own monies

in many cases

their all banks had the right to print

their own money and so uh the idea was

to create a uniform move towards a

uniform currency that everyone could

agree on uh just to make it easier to

communicate in

within business

hamilton also argued that a growing

financial community required

a central bank to facilitate

increasingly complex commercial

transactions the bank of the united

states as created

by congress in 1791 was charted for 20

years

the bank would have one central branch

in philadelphia with branch banks

located in major cities uh throughout

the country

the bank would uh sell 25 000 shares of

stocks at 400 each giving the bank a 10

million 10 million dollars to start the

government would buy 20 percent of all

stock the remaining 80 percent would be

sold to the general public

the stock was completely sold out in

less than four hours

giving an idea of the popularity of of

this program

there were 25 men on the board of

directors of which the president

appointed five the other 20 would be

chosen by private stockholders

the bank's charter prompted a major

debate on constitutional principles

in his written opinion to washington

jefferson argued vigorously that

congress lacked the authority to

establish a national bank his strict

view of the constitution rested on the

assumption that the federal government

had only the powers explicitly stated in

the document so

he buys against hamilton's loose

interpretation but again jefferson's

going to change his tune when he becomes

president he will adopt a

hamiltonian loose interpretation of the

constitution

hamilton obviously disagreed with

jefferson and prepared a masterful essay

entitled defense of the

constitutionality of the bank he assured

washington that article 1 section 8

clause 18 of the constitution the

congress shall have

power to make all laws which shall be

necessary and proper for carrying into

execution the foregoing powers

as discussed earlier he uh he basically

argued that justified in issuing

issuing charters to national banks

and that argument would win the day it

was after all right there in the

constitution

even though it was a loose

interpretation of the constitution

doesn't explicitly say that they have it

but it does give congress um

congress shall have all have power to

make all laws which shall be necessary

and proper right and so in that if you

need a bank you need a bank if you need

to

have minimum wage laws you need to have

minimum wage laws right the law was

intended to

meet the challenges of any particular

time

and challenge within the country's

future

the foregoing powers upon which hamilton

placed so much weight were

taxation

regulation of commerce

and making war he boldly articulated a

doctrine of implied powers an

interpretation of the constitution that

neither madison nor jefferson had

anticipated and again they were

vigorously against but again jefferson

would change his tune once he became

president

so in summary of hamilton hamilton's

programs of funding the domestic debt uh

assumptions in the bank

encroached on

i'm sorry and the banks encroached on

states rights creating the framework

framework for america's two-party system

so again the the debate was between

hamilton and jefferson and each of their

supporters um

and it framed the two-party system we're

going to look at that more closely in a

later lecture

but that's this is where it begins these

programs shapes a strong national

economic policy

which created a permanent national debt

only paid off once

in 1835 by andrew jackson

he was a skillful planner but at heart

he was a gambler

the huge debt which he confidently urged

congress to assume could only be paid

off in good times um

hamilton's programs bolstered faith in

the government's credit and stabilized

the economy

and money supply by providing a sound

banking program and uniform currency

system at least moving towards the

uniform currency system

anyway that concludes uh hamilton and i

will see you in the next lecture take

care let me know if you have any

questions