Treasury Secretary Hamilton

On this day, in 1789, the United States Department of the Treasury was founded. At it's helm was a most capable individual by the name of Alexander Hamilton. As part of the first cabinet, he had the opportunity to significantly influence the direction of the young Republic. And influence it he would.

Hamilton was the perfect fit for the job. Although President Washington had enough experience and knowledge that he was capable of serving as his own Secretary of State or Secretary of War, he knew next to nothing about the subject of finance. Hamilton, on the other hand, had a profound grasp of the subject, as well as experience working in the area. When he was nine, he went to work as a clerk at a counting house in St. Croix. During the Revolutionary War, he would read in his spare time any book on the subject he could get his hands on.

In addition to being one of the most influential delegates at the Philadelphia Convention (Article II, the Executive Branch, was his doing) and the ratification (The Federalist Papers were his idea, he wrote the bulk of them, and he was influential in persuading New York to ratify the Constitution), he also had a profound impact on our financial system.

In January of 1790, he delivered the First Report on the Public Credit to Congress. In this report, he argued that it was necessary for the United States government to pay off it's Revolutionary War debt at it's face value. In addition, he proposed that the Federal government assume the debts that the states had left over.

He also advocated a central bank, with the argument being that it would be easier for the government to perform day-to-day financial operations via a central bank. At the time, this was a very controversial proposal. Thomas Jefferson (wrongfully) doubted the constitutionality of it. Even today, the idea of central banking is controversial, with many economists and politicians advocating for the abolition of the Federal Reserve Bank and a return to the gold standard.

Despite arguments against the bank at the time, the United States become a leading economic power during the 19th century, with our financial system having a profound impact upon Otto von Bismarck's Germany and the Meiji Restoration in Japan. Because of Hamilton's system, the United States is one of the most, if not the most, economically prosperous countries in the world.