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.