Alexander Hamilton (1755–1804) was an American soldier, economist, political philosopher, one of the framers of the U.S. Constitution, and the first Secretary of the Treasury. Hamilton was the chief architect of George Washington’s economic policies, including plans to restore national credit, establish a national bank, and create a tariff system. He founded the Federalist Party and became its leader.

Early Life

Hamilton was born in the West Indies. His father disappeared when he was seven, and by ten he was working at the docks. His mother died when he was 13, leaving him homeless. At 14, he became a manager at a trading company, and at 17 he studied at King’s College in New York (now Columbia University), after which he immediately joined the military.

Military Career

During the American Revolutionary War, Hamilton served as captain of an artillery company. In 1777, he was promoted to lieutenant colonel and served as aide-de-camp to George Washington, becoming Washington’s personal military assistant.

Post-War Career

After the war, Hamilton returned to New York to study law, completing four years of coursework in just six months. He became one of New York’s most prominent lawyers and was elected to represent New York in the Continental Congress. He also founded the Bank of New York.

Hamilton represented New York in drafting the Constitution and wrote a series of essays explaining it, known as The Federalist Papers, which remain a key source for constitutional interpretation. They are considered the third most important documents in American political literature, after the Declaration of Independence and the Constitution. Washington appointed him Secretary of the Treasury. Hamilton pioneered the issuance of government bonds and founded the Bank of the United States.

The 1790 Compromise

On April 18, 1790, the 33-year-old Treasury Secretary Hamilton met Secretary of State Thomas Jefferson by chance outside the presidential residence. Hamilton said:

“Mr. Secretary, I need your help. The funding bill I submitted has failed four times in Congress. If you could change your mind and use your influence, it might pass next time.”

Jefferson replied:

“Mr. Secretary, I oppose even the Constitution itself, let alone the funding bill, as it does not authorize the federal government to assume state debts from the Revolutionary War. But if you like, we can discuss it over dinner tomorrow. I’ll invite Madison too.”

Hamilton eagerly agreed. The dinner led to a historic compromise: in exchange for New York’s support of Virginia as the permanent capital, Jefferson and Madison agreed to support Hamilton’s funding bill. Congress quickly passed The Report on Public Credit, signed into law by President Washington, laying the foundation for the U.S. financial system.

Financial Legacy

In less than four years as Secretary of the Treasury, Hamilton created a complete American financial system with five pillars:

A unified national debt market
A central bank-led banking system
A standardized currency system (gold and silver standards)
A tax system based on tariffs and excise
Policies promoting industrial development

Hamilton said: “The credit of a nation must be a perfect whole. All parts must be carefully coordinated, like a tall tree with flourishing branches.” This “tree” eventually grew into the global dominance of the U.S. dollar.

Hamilton’s financial philosophy was informed by his deep understanding of Britain. He wrote: “Since the 1690s, England created the Bank of England, a tax system, and a government bond market. By the 18th century, the British national debt market had grown rapidly, generating immense profit, winning global wars, and sustaining a global commercial empire.” He argued that for America to prosper and free itself from dependence on British capital markets, it needed its own bond market and financial system.

Political Opposition and Vision

Hamilton’s Federalist Party and Jefferson’s Republican Party sharply opposed each other politically and economically. Jefferson envisioned an agricultural-based democratic republic, while Hamilton wanted an industrial and commercial powerhouse akin to Britain. Politically, Jefferson advocated a strong legislative branch to limit executive power; Hamilton supported a strong executive. Economically, Jefferson prioritized agriculture; Hamilton prioritized industry. Their rivalry, though intense, ultimately complemented each other, allowing America to develop both agriculture and industry.

Hamilton’s approach represented a third political philosophy in America: a strong but limited government that provides opportunities while maintaining order, distinct from the large-government Democratic tendency and small-government Republican tendency.

Duel and Death

In the 1800 presidential election, Hamilton opposed Aaron Burr’s candidacy. Burr held a grudge against him and challenged him to a duel in 1804. According to duel etiquette, Hamilton fired first but intentionally missed. Burr shot Hamilton in the right chest, fatally wounding him. Hamilton had recorded the night before that he would not fire to kill, but fired a “useless” shot the next day, which led to his death.

Hamilton requested a church ceremony for Holy Communion before dying, initially refused because dueling was considered a violation of Christian law. Eventually, he received the ceremony and reconciled spiritually, even with Burr. Hamilton died at age 47 (or 49). His death was a tragic loss to the nation, but his financial vision laid the foundation for America’s enduring economic system.

Aftermath for Aaron Burr

Burr, who killed Hamilton, left the vice presidency in 1805. Disgraced, he fled to the southern territories of Texas, leasing 40,000 acres from Spain to develop. He was accused of treason for allegedly plotting to seize U.S. territory and wage war against Spain but was acquitted in 1808. Burr later returned to New York and lived there until his death at age 80.