Four Pillars of Alexander Hamilton
From Wikipedia, the free encyclopedia
The Four Pillars refers to a financial plan written by a previous secretary of the treasury, Alexander Hamilton. It was proposed in the early 1790's by Hamilton to combat the growing debt of the newly formed United States of America. Each pillar was actually an idea of financial recovery. These plans were not wholly welcomed by the population of the United States. Those who opposed the plans included James Madison and especially Thomas Jefferson.
Contents |
[edit] Pillar 1: Funding the National Debt
Hamilton's first suggestion was to industrialize the U.S. He proposed rapid commercial development including manufacturing and agriculture. This, he said, would form an intricate financial system that would reduce the need for foreign imports. If the reliance on other countries were reduced, Hamilton hypothesized that our debt to other countries would reduce accordingly.
Also within this first pillar was the weight of financial support and where it would fall among the people. To answer this problem, Hamilton relied on the high class society -- the gentry. He noted that if they felt that their property and value could increase, or for that matter, decrease, they would opt to invest in the community. This would add worth to the area, creating as well as investing money in the nation as a whole.
[edit] Pillar 2: Assuming State Debts
An estimated $25 million of debt was owed by the states. A majority of this money was deadlocked by investors holding on to government loan certificates. To counter this roadblock, Alexander Hamilton sought to have the United States agree to pay these loans at full value. By doing this, he coaxed the holders of those certificates to invest in new government bonds. The bonds would pay back in interest after several years, freeing up money to pay off dues. Then, after the United States was able to grow in size and value through his suggested industrialization, the government could pay back the bonds without hesitation. This plan seemed to be a great idea to collect quick revenue and free the nation from its burden.
[edit] Pillar 3: Imposing Custom and Excise Taxes
Hamilton also believed that in order to help bring the new nation out of debt, custom and excise taxes needed to be put into place. They would indirectly and subtly bring in money for the United States to spend. He interpreted the Constitution article quoting the right to employ laws to support power as a proponent to this idea. Others, however, disagreed with this need to tax the people, being that they just escaped taxation from Great Britain and that the nation was fragile as it was.
[edit] Pillar 4: Establishing the Bank of the United States
The fourth and final pillar was the idea of creating a central bank to control the United States revenue. Hamilton pressed the notion that the bank would control millions of dollars worth of government bonds and would be able to standardize a national currency. After all, how can people trade outer-region or pay federal taxes without a currency with a set value? This question was on Hamilton's mind when he drafted this pillar. Madison, as well as other Congress supporters of Jefferson, cried foul at this. They claimed that nowhere in the United States Constitution can the right to control financial corporations be found. However, Hamilton interpreted the right to centralize government finances from the right to support government power.
[edit] Sources
Information channeled by Maximilian D. Meese.
