Hamilton and the U.S. Constitution
In May 1787, the democratic government that had emerged from the American Revolution was only eight years old. But already, it threatened to crumble. Although the Articles of Confederation had organized the 13 states into a loose union, the Articles proved inadequate to the task of effectively governing that union.
A better form of government was needed -- one that could unite the states and weigh their competing interests with justice, and stabilize the nation's finances. Delegates from each state had agreed to meet that May in Philadelphia to repair the Articles. But in the end, the articles would be thrown out altogether in favor of a new Constitution. That document, and the new government that emerged from it, would in large part owe their very survival to Alexander Hamilton.
Hamilton, who served as one of three New York delegates to the Constitutional Convention, had spent years pondering the issues the delegates would confront. As an aide to Commander-in-Chief George Washington, Hamilton had seen firsthand the difficulties involved in funding and operating the Continental Army. In the army camps, Hamilton spent his spare time studying the ideas of European economists and copying ideas about government and economics into his personal notebooks.
At the Constitutional Convention, Hamilton played little part in the writing of the Constitution itself, although he served on the committees that outlined convention rules and writing style. His proposal for the new government was modeled on the British system, which Hamilton considered the "best in the world."
Under Hamilton's system, senators and a national "governor" would be chosen by special electors, and would serve for life. Members of an assembly would be elected directly by citizens; each member would serve a three-year term. State governors would be chosen by the national governor.
Although his fellow delegates politely listened to Hamilton's proposal, it received endorsement from no one. But if the delegates rejected the extreme degree to which Hamilton's plan concentrated power at the federal level, they understood that giving more power to the central government was necessary for the nation's survival.
The solution adopted by the delegates was a constitution that balanced the powers of three branches -- executive, legislative, and judicial. And by clearly defining the relationships among the states, it allayed the fears of those who worried that certain states might become too powerful.
Hamilton, like most of the delegates, disagreed with many aspects of the final draft. But the existing government was on the verge of chaos. The monetary system was in collapse, and the military was dangerously weak. All but three of the delegates signed the document.
Now it would be up to the states to ratify -- or reject -- the Constitution. Federalists such as Hamilton supported ratification. But Anti-Federalists, who feared that the document gave too much power to the federal government, worked to convince the states to reject it.
In order for the Constitution to take effect, nine of the 13 states would have to ratify. But even if that minimum number were met without ratification by powerful states such as Pennsylvania, Virginia, and New York, the new government would not hold. New York, in particular, appeared problematic. Of the three delegates from that state, only Hamilton had signed the Constitution. The other two delegates had fled the convention in anger. And in New York, Anti-Federalists such as Governor George Clinton held power.
No one was better prepared to defend the Constitution than New Yorker Alexander Hamilton. In 1787-88 he worked with John Jay and James Madison to write series of 85 essays in support of the Constitution. Known as "The Federalist," these remarkable essays proved critical in achieving ratification of the document in New York, as well as the rest of the nation. The essays were published under the pen name Publius. Hamilton himself wrote more than two-thirds of them.
In the first of the essays, Hamilton set the stage for those that would follow, proclaiming that "the vigor of government is essential to the security of liberty." The essays were churned out at a remarkable pace, especially considering the rational, learned, and eloquent defense of the Constitution that Hamilton and co-writers developed. Among the topics covered by Hamilton were "Dangers from Dissensions Between the States," "Defects of the Present Confederation," and the "General Power of Taxation."
Today's scholars consider "The Federalist" classics of political literature. At the time, they proved effective in gaining allies for the Constitution. But perhaps nearly as remarkable as the writing of "The Federalist" feat was, was Hamilton's performance at the New York ratifying convention in Albany.
By the time the convention met in June, 1788, several major states, including New York and Virginia, had not yet ratified. Hamilton and 19 other Federalist delegates faced a seemingly immobile and palpably oppositional group of 47 Anti-Federalists. Hamilton was outnumbered. Without New York, the new government would inevitably split into separate confederacies.
Over the next month, Alexander Hamilton presented the convention with his case for ratification. Day after day, hour after hour, the eloquent attorney spoke, hammering away at the Anti-Federalists' arguments. The ratification of the Constitution by Virginia bolstered his case, but the supreme logic and persuasive abilities of Hamilton proved critical as well. Opposition evaporated, and the Constitution was approved.
Hamilton had helped to save the Constitution. But creating a government on paper and actually operating that government were two different matters. Hamilton had helped to ensure the Constitution's ratification. And now, as Treasury secretary under President George Washington, he would build the economic system that enabled the new nation to survive.
Even before the Revolution began, Hamilton had recognized that the future of America lay in business and industry. And he understood that to develop into an industrial power, America would need a powerful economic system. But during the Revolution and the years that followed, the economy had been a shambles. The Continental Army had been nearly paralyzed by the Continental Congress' inability to collect taxes. The war had been funded largely by the issue of bonds, most of which went unpaid at war's end. And the new government lacked a revenue source to pay these debts -- or to pay for funding defense or other national projects.
In his position on Washington's cabinet, Hamilton worked assiduously to solve these problems. Again, he would have to overcome some skepticism. Taxes had been a major reason for throwing off British rule. But Hamilton understood taxes were a necessary evil. And he developed a plan that would pay off America's debts and set the nation on course for an economically prosperous future.
Hamilton's course of action, delivered to the House of Representatives in his "Report on Credit" of January 14, 1790, was threefold. First, the government should pay off the war bonds it had issued. To fail to do so, he argued, would establish the federal government as a bad debtor. Second, the government should assume the debts of the states. Although many argued that this was another unnecessary expansion of central government, Hamilton realized that to have all states manage their debts was inefficient. Finally, he proposed that the government establish a steady revenue stream by taxation of imported goods.
For months, Hamilton's proposals languished in Congress. The final sticking point was the federal assumption of state debts. Some states had made good on their promise to pay off war debts, but others had not. If the debts of states that had failed to pay were shifted to the federal government, citizens in states that had paid their debts would end up paying twice.
Alexander Hamilton had driven the Constitution through the New York convention with impeccably focused logic. But he would use a bit of old-fashioned horse trading to get his financial plan through Congress. Among the states opposed to assumption of state debts was Virginia. Virginians were also unsettled about the planned location of the federal capital in New York. Hamilton realized he could use this issue as leverage.
Late in June, Hamilton met in private with Virginia Congressman James Madison. A deal was struck: Virginians would support assumption of state debts, and President Washington's administration would support moving the capital to a location on the Potomac River. With the backing of Virginia, Hamilton's proposals were approved.
Hamilton's economic wizardry was not yet finished. Later in 1790 he proposed the creation of a federal bank. When this, too, was approved, his vision was complete. America was on a solid footing and prepared for a prosperous future. In fact, Hamilton had probably saved the economy from ruin.
In a span of just under fourteen years, in his efforts to pass the Constitution and develop a sound monetary policy, Alexander Hamilton had provided invaluable service to his nation. But in this struggle, he had made powerful enemies. Demonized by the republicans as a would-be dictator or a promoter of monarchy, he saw political power slip from his grasp in 1800, when Thomas Jefferson became president and Aaron Burr vice president. Hamilton's decision to accept Burr's challenge was a last despairing attempt to stay in politics. It was an attempt that ended in tragedy.