4. 1 The Hamilton Reports
Under the new Government, Alexander Hamilton was the secretary of the treasury. The new nation was going through a serious financial problem i.e. there was the serious problem of foreign debt. Besides, there were other immediate concerns like the need for revenue, the means to pay salaries long due to the soldiers of the continental army. The Congress gave Hamilton the resting possibility of solving these and other financial problems.
In a series of 3 reports on the question of public finance,
Hamilton tried to give solutions to pressing financial problems
and put forth a long-term economic vision for the new nation. The
first of these reports (collectively known as the Hamilton Reports)
was on public credit. Here he stated that the national debt
could be paid through a novel method of ’funding.’ By this, Hamilton
meant that current holders could exchange their IOU’s at par for
interest bearing bonds.
His second report on a National Bank stated the need and significance of a federally chartered Bank. This new Bank of the United States managed by a board of directors chosen by the Government would provide services both to the government as well as the public. The bank’s aim would be to help trade and business by giving credit to businessmen.
The last of the 3 reports submitted by Hamilton in the Congress was on business. Here Hamilton put forth his vision for the new nation. The U.S. was still mainly an agricultural economy. While Hamilton believed that both agriculture and industry complemented each other, industry needed to be developed. And the method proposed for the development of industry was by way of protection. He suggested that to protect "infant industries so that they can grow strong enough to compete in the international market, the Government must impose high tariffs." The tariffs would raise the price of foreign goods, and create a market for homemade goods.